Filed Pursuant to Rule 424(b)(3)
File No. 333-84462
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 9, 2002
U.S. $50,005,600,650
General Electric Capital Corporation
Global Medium-Term Notes, Series A
Due From 9 Months to 60 Years From Date of Issue
-----------------
General Electric Capital Corporation may offer at various times up to U.S.
$50,005,600,650 of its global medium-term notes. We may offer notes denominated
in U.S., foreign and composite currencies. If we offer original issue discount
notes, we will use their initial offering prices to determine when we have
offered U.S. $50,005,600,650 of notes.
The following terms may apply to the notes. We will provide the final terms
for each note in a pricing supplement.
. The notes will mature in 9 months to 60 years.
. The notes may be subject to redemption at our option or repayment at the
option of the holder.
. The notes will bear interest at either a fixed or floating rate. The
floating interest rate formula may be based on:
. CD Rate . Treasury Rate
. Commercial Paper Rate . Prime Rate
. Federal Funds Rate . CMT Rate
. LIBOR . Eleventh District
Cost of Funds Rate
. The notes may be issued as indexed notes, dual currency notes, renewable
notes, extendible notes or amortizing notes.
. The notes will be in certificated or book-entry form.
. Interest will be paid on fixed rate notes on March 15 and September 15
of each year or as otherwise specified in the applicable pricing
supplement. Interest will be paid on floating rate notes on dates
specified in the applicable pricing supplement.
. The notes will have minimum denominations of $1,000 for book-entry notes
and $100,000 for certificated notes, in each case increased in multiples
of $1,000, unless otherwise specified in the applicable pricing
supplement. We will specify the minimum denominations for notes
denominated in a foreign or composite currency in the applicable pricing
supplement.
We expect to receive between $49,705,567,046 and $49,980,597,850 of proceeds
from the sale of the notes after paying the agents' commissions of between
$25,002,800 and $300,033,604. The exact proceeds from the sale of each note
will be determined at the time of issuance. We do not expect that any of the
notes will be listed on an exchange and a market for any particular tranche of
notes may not develop.
-----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement. Any representation to the
contrary is a criminal offense.
Deutsche Bank Securities
GECC Capital Markets Group, Inc.
Goldman, Sachs & Co.
JPMorgan
Lehman Brothers
Merrill Lynch & Co.
Salomon Smith
Barney
UBS Warburg
The date of this prospectus supplement is April 16, 2002.
RISKS OF FOREIGN CURRENCY NOTES AND INDEXED NOTES
This prospectus supplement does not describe all of the risks of an
investment in the notes. You should consult your own financial and legal
advisors about the risks entailed by an investment in the notes and the
suitability of your investment in the notes in light of your particular
circumstances. Notes denominated in a foreign currency are not an appropriate
investment for investors who are unsophisticated with respect to foreign
currency transactions. Indexed notes are not an appropriate investment for
investors who are unsophisticated with respect to the type of index or formula
used to determine the amount payable. You should also consider carefully, among
other factors, the matters described below.
Exchange Rates and Exchange Controls
An investment in a note denominated in a currency other than U.S. dollars
entails significant risks. These risks include the possibility of significant
changes in rates of exchange between the U.S. dollar and such currency and the
possibility of the imposition or modification of foreign exchange controls by
either the United States or foreign governments. These risks generally depend
on factors over which we have no control, such as economic and political events
and the supply of and demand for the relevant currencies. In recent years,
rates of exchange between the U.S. dollar and certain currencies have been
highly volatile, and you should be aware that volatility may occur in the
future. Fluctuations in any particular exchange rate that have occurred in the
past, however, are not necessarily indicative of fluctuations in the rate that
may occur during the term of any note. Depreciation of the specified currency
for a note against the U.S. dollar would result in a decrease in the effective
yield of such note (on a U.S. dollar basis) below its coupon rate and, in
certain circumstances, could result in a loss to you on a U.S. dollar basis.
Except as set forth below, if payment in respect of a note is required to be
made in a currency other than U.S. dollars and such currency is unavailable to
us due to the imposition of exchange controls or other circumstances beyond our
control or is no longer used by the relevant government or for the settlement
of transactions by public institutions of or within the international banking
community, then all payments in respect of such note will be made in U.S.
dollars until such currency is again available to us or so used. The amounts
payable on any date in such currency will be converted into U.S. dollars on the
basis of the most recently available market exchange rate for such currency or
as otherwise indicated in the applicable pricing supplement. Any payment in
respect of such note so made in U.S. dollars will not constitute an event of
default under the Indenture. However, if we cannot make payment in a specified
currency solely because that currency has been replaced by the euro, then,
beginning with the date the replacement becomes effective, we will be able to
satisfy our obligations under those notes by making payment in euro.
The paying agent will make all determinations referred to above at its sole
discretion. All determinations will, in the absence of clear error, be binding
on holders of the notes.
The information set forth in this prospectus supplement with respect to
foreign currency risks is general in nature. We disclaim any responsibility to
advise prospective purchasers of foreign currency notes with respect to any
matters that may affect the purchase, holding or receipt of payments of
principal of, premium, if any, and interest on such notes. Such persons should
consult their own counsel with regard to such matters.
Foreign Currency Judgments
The notes will be governed by and construed in accordance with the internal
laws of the State of New York. New York courts will normally enter judgments or
decrees for money damages in the foreign currency in which notes are
denominated. These amounts are then converted into U.S. dollars at the rate of
exchange in effect on the date the judgment or decree is entered. Courts in the
United States outside New York customarily have not rendered judgments for
money damages denominated in any currency other than the U.S. dollar.
S-2
Risks Associated with Indexed Notes
An investment in indexed notes entails significant risks that are not
associated with an investment in a conventional fixed rate debt security.
Indexation of the interest rate of a note may result in an interest rate that
is less than that payable on a conventional fixed rate debt security issued at
the same time, including the possibility that no interest will be paid.
Indexation of the principal of and/or premium on a note may result in an amount
of principal and/or premium payable that is less than the original purchase
price of the note, including the possibility that no amount will be paid. The
secondary market for indexed notes will be affected by a number of factors,
independent of our creditworthiness. Such factors include the volatility of the
index selected, the time remaining to the maturity of the notes, the amount
outstanding of the notes and market interest rates. The value of an index can
depend on a number of interrelated factors, including economic, financial and
political events, over which we have no control. In addition, if the formula
used to determine the amount of principal, premium and/or interest payable with
respect to indexed notes contains a multiple or leverage factor, the effect of
any change in the index will be increased. The historical experience of an
index should not be taken as an indication of its future performance.
Accordingly, you should consult your own financial and legal advisors as to the
risks entailed by an investment in indexed notes.
Credit Ratings
The credit ratings assigned to our medium-term note program reflect the
rating agencies' opinion of our ability to make payments on the notes when due.
The ratings do not take into account fluctuations in the market value of the
notes or the possibility that payments on indexed notes may be less than
anticipated because of changes in the specified index.
S-3
DESCRIPTION OF NOTES
General
The following description of terms of the notes supplements the general
description of the debt securities provided in the prospectus. However, the
pricing supplement for each offering of notes will contain the specific
information and terms for that offering. The pricing supplement may also add,
update or change information contained in this prospectus supplement. It is
important for you to consider the information contained in the prospectus, the
prospectus supplement and the pricing supplement in making your investment
decision.
This section describes some technical concepts, and thus we occasionally use
defined terms. You will find an alphabetized glossary at the end of this
prospectus supplement that defines all of the capitalized terms used in this
section that are not defined in this section.
The Indenture. We will issue the notes under the Indenture between us and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank) ("JPMorgan
Chase"). Since we have only summarized the most significant portions of the
Indenture below, you may want to refer to the Indenture for more detailed
information.
Ranking. The notes will be unsecured and will rank equally with all our
other unsecured and unsubordinated debt obligations. The notes and the
Indenture will not limit us from incurring additional debt and will not place
any other financial restrictions on us.
Amount. The amount of notes we may offer with this prospectus supplement
will be reduced to the extent we issue other debt securities, preferred stock,
warrants or support obligations under the prospectus. As of April 16, 2002, we
have issued and outstanding $56,116,386,000 of our global medium-term notes,
Series A. The amount of additional notes of this series that we may offer with
this prospectus supplement is $50,005,600,650. In addition, we may further
increase the amount of notes of this series that we may issue from time to
time. The Indenture does not limit the amount of notes that we may offer. If a
note is an Original Issue Discount Note, we will use its initial offering price
to calculate the amount issued.
Reopening of Issue. We may, from time to time, reopen an issue of notes and
issue additional notes with the same terms (including Maturity and interest
payment terms) as notes issued on an earlier date. After such additional notes
are issued they will be fungible with the previously issued notes to the extent
specified in the applicable pricing supplement.
Maturity. Each note will mature on any day from 9 months to 60 years from
its date of issue. However, each note may also be subject to redemption at our
option and repayment at your option (see "Optional Redemption" below).
Pricing Supplement. The pricing supplement relating to a note will describe
the following terms:
. the specified currency;
. whether the note is a fixed rate note, a floating rate note, an indexed
note, a dual currency note, a renewable note, an extendable note or an
amortizing note;
. the issue price;
. the original issue date;
. the stated maturity date;
. for a fixed rate note, the rate per annum at which it will bear
interest, if any, and the date or dates on which interest will be
payable if other than March 15 and September 15;
. for a floating rate note, the base rate, the initial interest rate, the
interest reset period, the interest payment dates, the Index Maturity,
the Designated LIBOR Currency, if any, the maximum interest rate, if
any, the minimum interest rate, if any, the Spread and/or Spread
Multiplier, if any, and any other terms relating to the particular
method of calculating the interest rate for the note;
S-4
. whether the note is an Original Issue Discount Note;
. for an indexed note, the manner in which interest payments and the
principal amount payable at Maturity will be determined;
. if such note is an amortizing note, an amortization schedule;
. whether the note may be redeemed at our option, or repaid at the
holder's option prior to the stated maturity date as described further
under "Optional Redemption or Repayment" below, and if so, the terms of
the redemption or repayment;
. for notes issued in currencies that may be replaced by the euro,
redenomination provisions, if any (see "Euro Redenomination" below);
. whether the notes are a reopening of notes previously issued; and
. any other terms that do not conflict with the provisions of the
Indenture.
Form of the Notes. We will issue the notes either in certificated form or
pursuant to a book-entry system.
Book-entry notes. When we issue notes in book-entry form, we will issue
one or more global certificates representing the entire issue of notes. All
of the notes that have been issued previously have been issued in book-entry
form. These certificates will name a nominee of The Depository Trust
Company, New York, New York ("DTC") as the owner of the notes. DTC maintains
a computerized system that will reflect your ownership of the notes through
an account you will maintain with your broker/dealer, bank, trust company or
other representative.
DTC's nominee will be considered the owner of your note in our records
and will be the entity entitled to cast a vote regarding your note. However,
DTC and the broker/dealers, banks, trust companies and other representatives
that are part of DTC's computerized system are required to contact you for
voting instructions.
Certificated notes. When we issue notes in certificated form, you will
receive a certificate evidencing your note. JPMorgan Chase will issue
certificated notes on our behalf and will only prepare such certificated
notes at our request. The certificate will name you as the owner of the
note, unless you choose to have your broker/dealer, bank, trust company or
other representative hold these certificates for you. If your name appears
on the certificate evidencing your note, then you will be considered the
owner of your note for all purposes under the Indenture. For example, if we
need to ask the holders of the notes to vote on a proposed amendment to the
notes, you will be asked to cast the vote regarding your note. If you have
chosen to have some other entity hold the certificates for you, that entity
will be considered the owner of your note in our records and will be
entitled to cast the vote regarding your note. However, this entity is
required to contact you for voting instructions.
Exchanges. Certificated notes cannot be exchanged for book-entry notes.
Book-entry notes can be exchanged for certificated notes only if (i) DTC
notifies us that it is unwilling or unable to hold global certificates and
another depositary is not appointed or (ii) we elect not to have the notes
represented by global certificates held by a depositary. In these limited
circumstances, we will issue to you certificated notes in exchange for the
book-entry notes. There will be no service charge for this exchange, but if
a tax or other governmental charge is imposed, we may require you to pay it.
Denominations. The notes will have minimum denominations of $1,000 for
book-entry notes and $100,000 for certificated notes, in each case increased in
multiples of $1,000, unless otherwise specified in the applicable pricing
supplement. The authorized denominations of notes denominated in a foreign or
composite currency will be described in the pricing supplement. DTC currently
limits the maximum size of any single global note to $500,000,000.
S-5
Registration and Transfer of Notes
Book-entry notes. If you transfer your note while it is in book-entry form,
the transfer will be reflected on the computerized system at DTC. Your
broker/dealer, bank, trust company or other representative will arrange for the
transfer to be reflected on DTC's records.
Certificated notes. In addition to acting as trustee under the Indenture,
JPMorgan Chase also acts as our registrar for notes issued in certificated
form. You may go to JPMorgan Chase's office at 55 Water Street, Room 234, North
Building, New York, New York 10041 if you want to:
. register the transfer of any certificated note;
. exchange certificated notes for notes of different denominations;
. deliver payment instructions;
. obtain a new note to replace a note that has been lost or destroyed (you
may be required to provide a document to JPMorgan Chase and us agreeing to
return the new certificate if the missing one is found);
. present notes that have matured or been redeemed in exchange for payment.
Depository
Each note will be deposited with, or on behalf of, DTC, as depository, and
registered in the name of Cede & Co. (DTC's partnership nominee). Investors may
elect to hold interests in the notes through DTC (in the United States) or, if
the notes are eligible, through Clearstream Banking, societe anonyme
("Clearstream, Luxembourg"), or Euroclear Bank S.A./N.V., as operator (the
"Euroclear Operator") of the Euroclear System ("Euroclear"), if they are
participants in such systems or indirectly through organizations which are
participants in such systems. Clearstream, Luxembourg and the Euroclear
Operator will hold interests on behalf of their participants through customers'
securities accounts in Clearstream, Luxembourg's and the Euroclear Operator's
names on the books of their respective depositaries, which in turn will hold
such interests in customers' securities accounts in the depositaries' names on
the books of the DTC. Citibank, N.A. will act as depositary for Clearstream,
Luxembourg and JPMorgan Chase will act as depositary for the Euroclear Operator
(in such capacities, the "U.S. Depositaries").
Clearstream, Luxembourg advises that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream, Luxembourg holds
securities for its participating organizations ("Clearstream Participants") and
facilitates the clearance and settlement of securities transactions between
Clearstream Participants through electronic book-entry changes in accounts of
Clearstream Participants, thereby eliminating the need for physical movement of
certificates. Clearstream, Luxembourg provides to Clearstream Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Clearstream, Luxembourg interfaces with domestic markets in several
countries. As a professional depositary, Clearstream, Luxembourg is subject to
regulation by the Luxembourg Monetary Institute. Clearstream Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters named in this
prospectus supplement. Indirect access to Clearstream, Luxembourg is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Clearstream
Participant either directly or indirectly.
Distributions with respect to the notes held beneficially through
Clearstream, Luxembourg will be credited to cash accounts of Clearstream
Participants in accordance with its rules and procedures, to the extent
received by the U.S. Depositary for Clearstream, Luxembourg.
The Euroclear Operator advises that Euroclear was created in 1968 to hold
securities for participants of Euroclear ("Euroclear Participants") and to
clear and settle transactions between Euroclear Participants through
S-6
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Euroclear includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries. Euroclear is operated by
the Euroclear Operator under contract with Euro-clear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries and may include the underwriters named in this prospectus
supplement. Indirect access to Euroclear is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator was granted a banking license by the Belgian Banking
and Finance Commission in 2000, authorizing it to carry out banking activities
on a global basis. It took over operation of Euroclear from the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York on December 31,
2000.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities
and cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to notes held beneficially through Euroclear will
be credited to the cash accounts of Euroclear Participants in accordance with
the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with the DTC's rules and will be settled in
immediately available funds using the DTC's Same-Day Funds Settlement System.
Secondary market trading between Clearstream Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Clearstream, Luxembourg and Euroclear and
will be settled using the procedures applicable to conventional eurobonds in
immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the DTC on the one hand, and directly or indirectly through Clearstream
or Euroclear Participants, on the other, will be effected in the DTC in
accordance with the DTC's rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving notes in the DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the DTC. Clearstream Participants and Euroclear Participants may not deliver
instructions directly to the DTC.
Because of time-zone differences, credits of notes received in Clearstream,
Luxembourg or Euroclear as a result of a transaction with a DTC Participant
will be made during subsequent securities settlement processing and will be
credited the business day following the DTC settlement date. Such credits or
any transactions in such
S-7
notes settled during such processing will be reported to the relevant Euroclear
Participants or Clearstream Participants on such business day. Cash received in
Clearstream, Luxembourg or Euroclear as a result of sales of notes by or
through a Clearstream, Luxembourg Participant or a Euroclear Participant to a
DTC Participant will be received with value on the DTC settlement date but will
be available in the relevant Clearstream, Luxembourg or Euroclear cash account
only as of the business day following settlement in the DTC.
Although the DTC, Clearstream, Luxembourg and the Euroclear Operator have
agreed to the foregoing procedures in order to facilitate transfers of notes
among participants of the DTC, Clearstream, Luxembourg and Euroclear, they are
under no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
Methods of Payment. JPMorgan Chase also acts as our paying agent, and will
make all payments on the notes on our behalf.
Book-entry notes. JPMorgan Chase will make payments of principal and
interest on book-entry notes to the account of DTC's nominee by wire
transfer of immediately available funds. Neither we nor JPMorgan Chase will
make any payments to owners of beneficial interests in book-entry notes.
Instead, DTC will credit the funds to which you are entitled to the account
of the broker/dealer, bank, trust company or other participant of DTC
through which you hold your note. That participant, in turn, will credit
these funds to your account (or the account of any other intermediary
through which you hold your note).
We understand that DTC's current practice is to credit interest payments
(including interest payable at Maturity) and principal payments in
immediately available funds. These payments and credits will be made
pursuant to the rules of DTC, in accordance with any standing instructions
you have with your broker/dealer, bank, trust company or other participant
in DTC through which you hold your notes and with customary practice in the
broker/dealer industry. Neither we nor JPMorgan Chase will be involved with,
or responsible for, the movement of funds once JPMorgan Chase has paid DTC.
Certificated notes. If you hold certificated notes, payments of
principal and interest due at Maturity or earlier redemption will be paid by
wire transfer of immediately available funds after you present the matured
or redeemed note at JPMorgan Chase's office (the address is given above).
Interest payable at any other time will be paid by check mailed to your
address as it appears in JPMorgan Chase's records. If you own $5,000,000 or
more of notes having the same terms and conditions, we will pay you interest
prior to Maturity by wire transfer of immediately available funds if you
give the appropriate instructions to JPMorgan Chase at least 10 calendar
days before the applicable interest payment date.
Special payment provisions for notes denominated in a foreign
currency. Purchasers of notes denominated in a foreign currency must pay
for their notes in that currency. If you prefer to pay in U.S. dollars, the
agents will convert U.S. dollars into the foreign currency on your behalf to
enable you to make payment in that currency. You must notify the agents that
you would like them to provide this service for you at least three Business
Days before the date of delivery of the note. These services are available
only in connection with the initial distribution of notes denominated in a
foreign currency.
Regardless of whether the notes are in book-entry or certificated form,
all payments of principal and interest on foreign currency notes (other than
dual currency notes) will be made in U.S. dollars based on the Noon Buying
Rate. JPMorgan Chase will convert these U.S. dollar payments into the
currency of the notes on your behalf if you request the conversion at least
ten calendar days before the applicable payment date.
Any currency conversion will be based upon a firm bid quotation in New
York City received by JPMorgan Chase at approximately 11:00 a.m., Eastern
Time, on the second Business Day preceding the applicable payment date from
a recognized foreign exchange dealer (which may be JPMorgan Chase). If
JPMorgan Chase cannot obtain a bid quotation for the conversion of U.S.
dollars into the relevant foreign currency, then payments on the note will
be made in U.S. dollars.
S-8
If you request an interest payment in a foreign currency, or, in the case
of a dual currency note, interest payments are to be made in a foreign
currency the payment will be paid by check mailed to your address as it
appears in JPMorgan Chase's records. If you request that the principal
payment on your note, including any interest payable at Maturity, be in a
foreign currency, or, in the case of a dual currency note, the principal
payment, including any interest payable at Maturity, is to be made in a
foreign currency, such payment will be paid by check after you present the
matured or redeemed note at JPMorgan Chase's office (the address is given
above). Checks in foreign currencies will be drawn from banks located
outside the U.S. If you hold $1,000,000 or more of notes denominated in a
foreign currency having the same terms and conditions, you can request that
JPMorgan Chase make payments in the foreign currency by wire transfer. You
must request wire transfers no later than the record date for interest
payments and, in the case of payments of principal, no later than fifteen
calendar days prior to Maturity. Foreign currency wire transfers must be
made to banks located outside the U.S.
DTC will not accept foreign currency payments. You may elect to receive
foreign currency payments in respect of book-entry notes by notifying your
broker/dealer, bank, trust company or other participant in DTC through which
you hold notes at least 15 calendar days prior to the payment date that you
have elected to receive all or a portion of the foreign currency payment in
that foreign currency and by providing your broker/dealer, bank, trust
company or other participant in DTC with wire transfer instructions to an
account maintained in that foreign currency. The DTC participant in turn
will notify DTC of your election and wire transfer instructions and DTC will
pass those on to JPMorgan Chase. If JPMorgan Chase receives those
instructions from DTC in time, you will receive payment in the foreign
currency, after deduction of JPMorgan Chase's currency conversion and other
costs. Otherwise, you will receive payment in U.S. dollars through DTC.
You will be responsible for the costs of any currency conversion effected
by JPMorgan Chase on your behalf.
Recipients of Payments
Payments of interest on notes are generally payable to the person in whose
name the note is registered at the close of business on the record date before
each interest payment date. However, interest will be payable at Maturity,
redemption or repayment to the person to whom principal is payable. The first
interest payment on any note originally issued between a record date and an
interest payment date or on an interest payment date will be made on the
interest payment date after the next record date. The record date for any
interest payment date for a floating rate note will be the date (whether or not
a Business Day) 15 calendar days immediately before the interest payment date,
and for a fixed rate note will be the last day of February or August (whether
or not a Business Day) immediately before the interest payment date or
Maturity, unless otherwise specified in the applicable pricing supplement.
Optional Redemption or Repayment. We may issue notes that permit us to
redeem them prior to their Maturity ("calls") or that permit you to require us
to repay them prior to their Maturity ("puts"). Any such redemption or
repayment provisions, including the date(s) on which the call or put may occur
and whether redemptions or repayments may be made in whole or in part, will be
described in the pricing supplement relating to the specific notes.
If we are permitted to call any notes, we will give notice of redemption to
you (or the entity that is the registered holder of your notes) by mail at
least 30 calendar days and not more than 60 calendar days prior to the date set
for redemption.
S-9
If you are permitted to put any notes, you must notify JPMorgan Chase at
least 30 calendar days and not more than 60 calendar days prior to the date set
for repayment. For any note to be repaid, JPMorgan Chase must receive (i) in
the case of a certificated note, the note with the attached "Option to Elect
Repayment" form completed, or a letter from a broker/dealer, bank or trust
company notifying JPMorgan Chase of your intent to elect repayment of your
notes and guaranteeing that you will deliver the note and the attached "Option
to Elect Repayment" form not later than five Business Days after the date set
for repayment or (ii) in the case of a book-entry note, instructions to such
effect from the beneficial owner of the note to DTC and forwarded by DTC to
JPMorgan Chase.
Any notice of redemption delivered by you or by us will be irrevocable.
Open-market Purchases. We may, at any time, purchase notes at any price
from holders of notes or in the open market. If we purchase any of our notes,
we may hold them, resell them, subject to applicable law, or surrender them to
JPMorgan Chase for cancellation.
Interest and Interest Rates
The interest rates we will offer with respect to the notes may differ
depending on, among other things, the aggregate principal amount of notes
purchased in a single transaction.
Fixed Rate Notes
Each fixed rate note will bear interest at the annual rate specified in the
note and in the applicable pricing supplement. Interest on the fixed rate notes
will be paid on March 15 and September 15 of each year or as specified in the
applicable pricing supplement. Interest on fixed rate notes will be computed
and paid on the basis of a 360-day year of twelve 30-day months or as specified
in the applicable pricing supplement. In the event that any Interest Payment
Date (as defined below) or Maturity for any fixed rate note is not a Business
Day, principal and/or interest on such fixed rate note will be paid on the next
succeeding Business Day; however, we will not pay any additional interest due
to the delay in payment.
Floating Rate Notes
General
Each floating rate note will have an interest rate formula. The formula may
be based on:
. the CD Rate
. CMT Rate
. the Commercial Paper Rate
. the Eleventh District Cost of Funds Rate
. the Federal Funds Rate
. LIBOR
. the Prime Rate
. the Treasury Rate
. another rate specified in the applicable pricing supplement.
The applicable pricing supplement will also indicate the Spread and/or
Spread Multiplier, if any. In addition, any floating rate note may have a
maximum or minimum interest rate limitation.
S-10
Date of Interest Rate Change
The interest rate on each floating rate note may be reset daily, weekly,
monthly, quarterly, semiannually or annually (the day on which such interest
rate is reset is the "Interest Reset Date" and the period from one Interest
Reset Date to the next Interest Reset Date is an "Interest Reset Period").
Unless we state otherwise in the applicable pricing supplement, the Interest
Reset Dates will be:
. for floating rate notes that reset daily, each Business Day;
. for floating rate notes (other than Treasury Rate notes) that reset
weekly, Wednesday of each week;
. for Treasury Rate notes that reset weekly, Tuesday of each week;
. for floating rate notes (other than Eleventh District Cost of Funds Rate
Notes) that reset monthly, the third Wednesday of each month;
. for Eleventh District Cost of Funds Rate Notes, all of which reset
monthly, the first calendar day of each month;
. for floating rate notes that reset quarterly, the third Wednesday of
March, June, September and December of each year;
. for floating rate notes that reset semiannually, the third Wednesday of
each of the two months specified in the pricing supplement; and
. for floating rate notes that reset annually, the third Wednesday of the
month specified in the pricing supplement.
If an Interest Reset Date for any floating rate note falls on a day that is
not a Business Day, it will be postponed to the following Business Day, except
that, in the case of a LIBOR note, if that Business Day is in the next calendar
month, the Interest Reset Date will be the immediately preceding Business Day.
How Interest Is Calculated
We will appoint a calculation agent to calculate interest rates on the
floating rate notes. Unless we choose a different party in the pricing
supplement, the lead agent for an issue of notes will be the calculation agent
for those notes. Floating rate notes will accrue interest from and including
the original issue date or the last date to which interest has been paid or
provided for, as the case may be, to but excluding the applicable Interest
Payment Date, as described below, or Maturity, as the case may be.
Accrued interest on floating rate notes will be calculated by multiplying
the principal amount of such note (or, in the case of an indexed note, unless
otherwise specified in the pricing supplement, the face amount of such indexed
note) by an accrued interest factor. The accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each day
will be computed by dividing the interest rate in effect on that day by 360, in
the case of CD Rate notes, Commercial Paper Rate notes, the Eleventh District
Cost of Funds Rate notes, Federal Funds rate notes, LIBOR notes and Prime Rate
notes, or by the actual number of days in the year, in the case of Treasury
Rate notes or CMT Rate notes. For these calculations, the interest rate in
effect on any Interest Reset Date will be the new reset rate.
The calculation agent will round all percentages resulting from any
calculation of the rate of interest on a floating rate note, if necessary, to
the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .9876545) would be rounded
to 9.87655% (or .987655)) and all currency amounts used in or resulting from
any calculation on floating rate notes will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
S-11
When Interest Is Paid
Unless we state otherwise in the applicable pricing supplement, we will pay
interest on floating rate notes as follows:
(a) for notes that reset daily, weekly or monthly, on the third
Wednesday of each month or on the third Wednesday of March, June,
September and December of each year specified in the pricing supplement;
(b) for notes that reset quarterly, on the third Wednesday of March,
June, September, and December of each year specified in the pricing
supplement;
(c) for notes that reset semiannually, on the third Wednesday of each
of two months of each year specified in the pricing supplement; and
(d) for notes that reset annually, on the third Wednesday of one
month of each year specified in the pricing supplement.
Each of the above dates is an "Interest Payment Date". We will also pay
interest on all notes at Maturity.
If an Interest Payment Date (other than at Maturity) for any floating rate
note falls on a day that is not a Business Day, it will be postponed to the
following Business Day and interest thereon will continue to accrue, except
that, in the case of a LIBOR note, if that Business Day would fall in the next
calendar month, the Interest Payment Date will be the immediately preceding
Business Day.
If the Maturity for a floating rate note falls on a day that is not a
Business Day, we will make the payment of principal and interest on the next
Business Day, without additional interest.
References below to information services include any successor information
services.
CMT Rate Notes
Each CMT Rate note will bear interest at a specified rate that will be reset
periodically based on the CMT Rate and any Spread or Spread Multiplier.
"CMT Rate" means, with respect to any Interest Determination Date, the rate
displayed on the Designated CMT Telerate Page under the caption ". . . Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 p.m.", under the column for the specified Index Maturity for:
(1) if the Designated CMT Telerate Page is 7051, the rate for the
Interest Determination Date; or
(2) if the Designated CMT Telerate Page is 7052, the weekly or
monthly average, as applicable, ended immediately preceding the week or
month, as applicable, in which the Interest Determination Date occurs.
The following procedures will apply if the rate cannot be set as described
above:
(a) if we do not specify any page, the Designated CMT Telerate Page
will be 7052 for the most recent week. If that rate is no longer
displayed on the relevant page, or if it is not displayed by 3:00 p.m.,
New York City time, on the Calculation Date, then the CMT Rate will be
the Treasury constant maturity rate for the specified Index Maturity as
published in the relevant H.15(519).
(b) If the rate is no longer published in H.15(519), or is not
published by 3:00 p.m., New York City time, on the Calculation Date,
then the CMT Rate for that determination date will be the Treasury
constant maturity rate for the specified Index Maturity (or other U.S.
Treasury rate for such Index Maturity for that Interest Determination
Date) as may then be published by either the Federal Reserve
S-12
Board or the U.S. Department of the Treasury that the calculation agent
determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15(519).
(c) If that information is not provided by 3:00 p.m., New York City
time, on the Calculation Date, then the CMT Rate will be calculated as a
yield to maturity, based on the average of the secondary market closing
bid side prices as of approximately 3:30 p.m., New York City time, on
that Interest Determination Date reported, according to their written
records, by three leading primary U.S. government securities dealers
(each, a "Reference Dealer") in The City of New York selected by the
calculation agent. These dealers will be selected from five Reference
Dealers using the following procedures:
. The calculation agent will eliminate the highest quotation (or,
in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest), for
the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an
original maturity of approximately the specified Index Maturity
and a remaining term to maturity of not less than the specified
Index Maturity minus one year.
. If two Treasury notes with an original maturity as described in
the preceding sentence have remaining terms to maturity equally
close to the specified Index Maturity, the quotes for the
Treasury Note with the shorter remaining term to maturity will be
used.
(d) If the calculation agent cannot obtain three Treasury note
quotations, the CMT Rate will be calculated as a yield to maturity based
on the average of the secondary market bid side prices as of
approximately 3:30 p.m., New York City time, on that Interest
Determination Date of three Reference Dealers in The City of New York
selected by the calculation agent using the same method described above,
for Treasury notes with an original maturity of the number of years that
is the next highest to the specified Index Maturity with a remaining
term to maturity closest to such Index Maturity and in an amount of at
least $100,000,000. If three or four (and not five) of the Reference
Dealers are providing quotes, then the CMT Rate will be based on the
average of the offer prices obtained, and neither the highest nor the
lowest of such quotes will be eliminated.
(e) If fewer than three Reference Dealers are providing quotes, the
rate of interest on CMT Rate notes will be the same as the rate of
interest thereon in the prior interest period.
CD Rate Notes
Each CD Rate note will bear interest at a specified rate that will be reset
periodically based on the CD Rate and any Spread and/or Spread Multiplier.
"CD Rate" means, with respect to any Interest Determination Date, the rate
on that Interest Determination Date for negotiable certificates of deposit
having the specified Index Maturity as published in H.15(519) under the heading
"CDs (secondary market)".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 3:00 p.m., New
York City time, on the Calculation Date, then the CD Rate will be the
rate for negotiable certificates of deposit having the specified Index
Maturity as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under
the caption "CDs (secondary market)."
(b) If the rate is not yet published in H.15(519), H.15 Daily Update
or another recognized electronic source by 3:00 p.m., New York City
time, on the Calculation Date, the CD Rate will be the average of the
secondary market offered rates, as of 10:00 a.m., New York City time, of
three leading nonbank dealers of negotiable U.S. dollar certificates of
deposit in The City of New York selected by
S-13
the calculation agent for negotiable certificates of deposit of major
money market banks with a remaining maturity closest to the specified
Index Maturity in a denomination of $5,000,000.
(c) If fewer than three dealers are providing quotes, the rate of
interest on the CD Rate note will be the same as the rate of interest
thereon in the prior interest period.
Commercial Paper Rate Notes
Each Commercial Paper Rate note will bear interest at a specified rate that
will be reset periodically based on the Commercial Paper Rate and any Spread
and/or Spread Multiplier.
"Commercial Paper Rate" means, with respect to any Interest Determination
Date, the Money Market Yield of the rate on that Interest Determination Date
for commercial paper having the specified Index Maturity as published in
H.15(519) under the heading "Commercial Paper--Nonfinancial".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 3:00 p.m., New
York City time, on the Calculation Date, then the Commercial Paper Rate will
be the Money Market Yield of the rate for commercial paper having the
specified Index Maturity as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying such rate,
under the caption "Commercial Paper-Nonfinancial".
(b) If the rate is not published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 p.m., New York City time, on
the Calculation Date, the Commercial Paper Rate will be the Money Market
Yield of the average for the offered rates, as of 11:00 a.m., New York City
time, on that Interest Determination Date, of three leading dealers of
commercial paper in The City of New York selected by the calculation agent
for commercial paper having the specified Index Maturity placed for an
industrial issuer whose bond rating is "AA", or the equivalent, by a
nationally recognized rating agency.
(c) If fewer than three dealers are providing quotes, the rate of
interest on the Commercial Paper Rate note will be the same as the rate of
interest thereon in the prior interest period.
Eleventh District Cost of Funds Rate Notes
Each Eleventh District Cost of Funds Rate note will bear interest at a
specified rate that will be reset periodically based on the Eleventh District
Cost of Funds Rate and any Spread and/or Spread Multiplier).
"Eleventh District Cost of Funds Rate" means, with respect to any Interest
Determination Date, the rate equal to the monthly weighted average cost of
funds for the calendar month preceding such Interest Determination Date as set
forth under the caption "11th District" on Telerate on page 7058 (or such other
page as is specified in the applicable pricing supplement) as of 11:00 a.m.,
San Francisco time, on such Interest Determination Date. If such rate does not
so appear, the Eleventh District Cost of Funds Rate shall be the FHLB Index for
the calendar month preceding the date of such announcement. If the Federal Home
Loan Bank of San Francisco fails to announce such rate for the calendar month
next preceding such Interest Determination Date, then the rate of interest on
the Eleventh District Cost of Funds Rate notes will be the same as the rate of
interest thereon in the prior interest period.
Federal Funds Rate Notes
Each Federal Funds Rate note will bear interest at a specified rate that
will be reset periodically based on the Federal Funds Rate and any Spread
and/or Spread Multiplier.
"Federal Funds Rate" means, with respect to any Interest Determination Date,
the rate on specified dates for Federal Funds published in H.15(519) prior to
11:00 a.m., New York City time, under the heading "Federal Funds Effective", as
such rate is displayed on Telerate Page 120.
S-14
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate does not appear on Telerate Page 120 or is not published
in H.15(519) prior to 11:00 a.m., New York City time, on the Calculation
Date, then the Federal Funds Rate will be the rate on such Interest
Determination Date published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Federal Funds (Effective)".
(b) If the rate does not appear on Telerate Page 120 or is not published
in H.15(519), H.15 Daily Update or another recognized electronic source by
3:00 p.m., New York City time, on the Calculation Date, the Federal Funds
Rate will be the average of the rates, as of 11:00 a.m., New York City time,
on that Interest Determination Date, for the last transaction in overnight
federal funds arranged by three leading brokers of federal funds
transactions in The City of New York selected by the calculation agent.
(c) If fewer than three brokers are providing quotes, the rate of
interest on the Federal Funds Rate notes will be the same as the rate of
interest thereon in the prior interest period.
LIBOR Notes
Each LIBOR note will bear interest at a specified rate that will be reset
periodically based on LIBOR and any Spread and/or Spread Multiplier.
The calculation agent will determine LIBOR on each Interest Determination
Date as follows:
(a) With respect to any Interest Determination Date, LIBOR will be
generally determined as either:
(1) If "LIBOR Reuters" is specified in the pricing supplement, the
average of the offered rates for deposits in the Designated LIBOR
Currency having the specified Index Maturity beginning on the second
London Business Day immediately after the Interest Determination Date,
that appear on the Designated LIBOR page as of 11:00 a.m., London time,
on that Interest Determination Date, if at least two offered rates
appear on the Designated LIBOR Page; or
(2) If LIBOR Telerate is specified in the pricing supplement, or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable pricing supplement, the rate for deposits in the Designated
LIBOR Currency having the specified Index Maturity beginning on the
second London Business Day immediately after such date (or, if pounds
sterling is the Designated LIBOR Currency, beginning on such date or, if
euro is the Designated LIBOR Currency, beginning on the second TARGET
Settlement Day immediately after such date), that appears on the
Designated LIBOR Page as of 11:00 a.m., London time, on that Interest
Determination Date.
Where (1) above applies, if fewer than two offered rates appear on the
Designated LIBOR Page, or, where (2) above applies, if no rate appears on
the Designated LIBOR Page, LIBOR for that Interest Determination Date will
be determined based on the rates on that Interest Determination Date at
approximately 11:00 a.m., London time, at which deposits on that date in the
Designated LIBOR Currency for the period of the specified Index Maturity are
offered to prime banks in the London interbank market by four major banks in
that market selected by the calculation agent and in a principal amount of
not less than $1,000,000 (or its foreign currency equivalent) that in the
calculation agent's judgment is representative for a single transaction in
the Designated LIBOR Currency in such market at such time (a "Representative
Amount"). The offered rates must begin on the second London Business Day
immediately after the Interest Determination Date (or if pounds sterling is
the Designated LIBOR Currency, commencing on such Interest Determination
Date or, if euro is the Designated LIBOR Currency, beginning on the second
TARGET Settlement Day immediately after such date).
The calculation agent will request the principal London office of each of
these banks to quote its rate. If the calculation agent receives at least
two quotations, LIBOR will be the average of those quotations.
(b) If the calculation agent receives fewer than two quotations, LIBOR
will be the average of the rates quoted at approximately 11:00 a.m., New
York City time, on the Interest Determination Date by three major
S-15
banks in the Principal Financial Center selected by the calculation agent.
The rates will be for loans in the Designated LIBOR Currency to leading
European banks having the specified Index Maturity beginning on the second
London Business Day after that date (or, if pounds sterling is the
Designated LIBOR Currency, commencing on such date or, if euro is the
Designated LIBOR Currency, beginning on the second TARGET Settlement Day
immediately after such date) and in a Representative Amount.
(c) If fewer than three banks provide quotes, the rate of interest on the
LIBOR notes will be the same as the rate of interest thereon in the prior
interest period.
Prime Rate Notes
Each Prime Rate note will bear interest at a specified rate that will be
reset periodically based on the Prime Rate and any Spread and/or Spread
Multiplier.
"Prime Rate" means, with respect to any Interest Determination Date, the
rate set forth on that Interest Determination Date in H.15(519) under the
heading "Bank Prime Loan".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) by 3:00 p.m., New York City
time, on the Calculation Date, then the Prime Rate will be the rate as
published on such Interest Determination Date in H.15 Daily Update, or such
other recognized electronic source used for the purpose of displaying such
rate under the caption "Bank Prime Loan".
(b) If the rate is not published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 p.m., New York City time, on
the Calculation Date, then the Prime Rate will be the average (rounded
upwards, if necessary, to the next higher one-hundred thousandth of a
percentage point) of the rates publicly announced by each bank on the
Reuters Screen USPRIME1 Page as its prime rate or base lending rate for that
Interest Determination Date.
(c) If fewer than four, but more than one, rates appear on the Reuters
Screen USPRIME1 Page, the Prime Rate will be the average of the prime rates
(quoted on the basis of the actual number of days in the year divided by a
360-day year) as of the close of business on the Interest Determination Date
by four major money center banks in The City of New York selected by the
calculation agent.
(d) If fewer than two rates appear, the Prime Rate will be determined
based on the rates furnished in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business
under the laws of the United States, or any State thereof, having total
equity capital of at least $500 million and being subject to supervision or
examination by a Federal or State authority, as selected by the calculation
agent.
(e) If no banks are providing quotes, the rate of interest on the Prime
Rate notes will be the same as the rate of interest thereon for the prior
interest period.
Treasury Rate Notes
Each Treasury Rate note will bear interest at a specified rate that will be
reset periodically based on the Treasury Rate and any Spread and/or Spread
Multiplier.
"Treasury Rate" means, with respect to any Interest Determination Date, the
rate from the most recent auction of direct obligations of the United States
("Treasury bills") having the specified Index Maturity as it appears under the
caption "Investment Rate" on Telerate Page 56 or Telerate Page 57 (or any other
pages as may replace such pages on such service).
S-16
The following procedures will apply if the rate cannot be set as described
above:
(a) If, by 3:00 p.m., New York City time, on the Calculation Date for an
Interest Reset Period, Treasury bills of the specified Index Maturity have
been auctioned on an Interest Determination Date during that Interest Reset
Period, but the rate for such Interest Determination Date does not appear on
either Telerate Page 56 or Telerate Page 57, the rate will be the Bond
Equivalent Yield on such Interest Determination Date of the rate for
Treasury bills of the specified Index Maturity as set forth in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, for that day under the caption "U.S. Government
securities/Treasury bills/Auction high."
(b) If the rate cannot be set as described in (a) above by 3:00 p.m., New
York City time, on the Calculation Date, then the rate will be the Bond
Equivalent Yield on such Interest Determination Date of the auction rate for
Treasury bills of the specified Index Maturity as announced by the U.S.
Department of the Treasury.
(c) If the rate cannot be set as described in (b) above by 3:00 p.m., New
York City time, on the Calculation Date, then the rate will be the Bond
Equivalent Yield, on such Interest Determination Date, of
the rate for Treasury bills of the specified Index Maturity as set forth in
H.15(519), under the caption "U.S. Government securities/Treasury
bills/Secondary Market."
(d) If the rate cannot be set as described in (c) above by 3 p.m., New
York City time, on the Calculation Date, then the rate will be the Bond
Equivalent Yield, on such Interest Determination Date, of the rate for
Treasury bills of the specified Index Maturity as set forth in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the caption "U.S. Government securities/Treasury
bills/Secondary Market."
(e) If the rate cannot be set as described in (d) above by 3 p.m., New
York City time, on the Calculation Date, then the rate will be the average
of the secondary market bid rates as of approximately 3:30 p.m., New York
City time, on the Interest Determination Date, of three leading primary U.S.
government securities dealers in The City of New York selected by the
calculation agent for the issue of Treasury bills with the remaining
maturity closest to the specified Index Maturity.
(f) If the rate cannot be set as described in (e) above, then the rate of
interest on the Treasury Rate notes will be the same as the rate of interest
thereon in the prior interest period.
Indexed Notes
We may offer indexed notes under which principal or interest is determined
by reference to an index related to:
(a) the rate of exchange between the specified currency for such note and
the Designated LIBOR Currency;
(b) the difference in the price of a specified commodity on specified
dates;
(c) the difference in the level of a specified stock index, which may be
based on U.S. or foreign stocks, on specified dates; or
(d) any other objective price or economic measures described in the
pricing supplement.
We will describe the manner of determining principal and interest amounts in
the pricing supplement. We will also include historical and other information
regarding the index or indexes and information concerning tax consequences to
holders of indexed notes.
Interest payable on an indexed note will be based on the face amount of the
note. The pricing supplement will describe whether the principal payable upon
redemption or repayment prior to Maturity will be the face amount, the index
principal amount at the time of redemption or repayment or some other amount.
S-17
Dual Currency Notes
We may offer dual currency notes under which we have the option to make all
payments in a currency that is different than the currency in which the notes
were issued. We can only exercise this option with respect to all dual currency
notes issued on the same day with the same terms.
The pricing supplement will include related tax information and will specify
the date on which we may exercise our option.
If we elect to exercise our option to make scheduled payments in the
alternate currency, we will notify you by mail within two Business Days. We
will not be able to withdraw such notice once it has been mailed to you.
Because of fluctuating exchange rates, you may receive less in interest
and/or principal in the alternate currency than you would if we made payments
in the notes' original currency. For further information regarding certain
risks inherent in notes denominated in currencies other than U.S. dollars, see
"Risks of Foreign Currency Notes and Indexed Notes" above.
Renewable Notes
We may issue renewable notes which will bear interest at a specified rate
that will be reset based on a base rate and any Spread and/or Spread Multiplier.
The Maturity of a renewable note will be automatically extended for a twelve
month period on each maturity date unless you elect to terminate the automatic
extension. To terminate the automatic extension of your renewable note, you
must notify JPMorgan Chase within the time frame specified in the pricing
supplement. You may choose to maintain the automatic extension provision for a
portion of your note so long as that portion equals at least $100,000 (or its
foreign currency equivalent). The Maturity of the renewable notes cannot be
extended beyond the final maturity date specified in the pricing supplement. If
you elect to terminate the automatic extension of any portion of your renewable
note, you will receive payment of principal on that portion on an interest
payment date falling approximately six months after the date on which the note
was scheduled to be extended.
You may revoke your election to terminate the automatic extension of any
portion of your renewable note if such portion equals at least $100,000 (or its
foreign currency equivalent). To revoke your election you must notify JPMorgan
Chase prior to the fifteenth calendar day before the portion is scheduled to
mature. An election to terminate the automatic extension of a renewable note
will be binding on any subsequent holder of the note unless it is properly
revoked.
We may elect to redeem the total amount or a portion of a renewable note at
a redemption price of 100% of its principal amount plus accrued interest. If we
decide to redeem a renewable note we will notify you by first class mail at
least 30 calendar days but, not more than 60 calendar days prior to the
redemption date.
We may also issue renewable notes under which the Spread and/or Spread
Multiplier is reset by a remarketing agent using remarketing procedures
included in the pricing supplement.
Extendible Notes
We may issue extendible fixed rate notes under which we have the option to
extend the notes' stated maturity date for one or more whole years up to a date
specified in the pricing supplement. If we elect to extend the notes, we must
notify JPMorgan Chase at least 45 calendar days and not more than 60 calendar
days prior to the notes' original stated maturity date. JPMorgan Chase will
notify you of our decision to extend the Maturity of the notes by first class
mail. The notice will specify the notes' new Maturity date, the interest rate
applicable to the extension period and any applicable redemption provisions.
S-18
We can increase the interest rate for the extension period by notifying
JPMorgan Chase at any time prior to 10:00 a.m., New York City time, on the
twentieth calendar day before the extended notes are scheduled to mature.
JPMorgan Chase will send you notice of the increase in interest rate in a
manner agreed upon by us and JPMorgan Chase. We cannot revoke our election to
increase the interest rate.
If we elect to extend the Maturity of an extendible note, you have the
option to require us to repay such note on the Maturity date then in effect at
a price equal to the principal amount of the note plus any accrued interest to
such date. To exercise this option you must notify JPMorgan Chase at least 25
calendar days but not more than 60 calendar days prior to the date the notes
are scheduled to mature. You may notify JPMorgan Chase either by delivering to
JPMorgan Chase the note with the attached "Option to Elect Repayment" form
completed, or by delivering to JPMorgan Chase a letter from a broker/dealer,
bank or trust company notifying JPMorgan Chase of your intent to redeem your
notes and guaranteeing that you will deliver the note and the attached "Option
to Elect Repayment" form not later than five Business Days after the date set
for redemption. You may revoke your election to be repaid at any time before
3:00 p.m., New York City time, on the twentieth calendar day prior to the date
the notes are scheduled to mature.
Amortizing Notes
We may offer amortizing notes. Unless otherwise specified in the applicable
Pricing Supplement, interest on an amortizing note will be computed on the
basis of a 360-day year of twelve 30-day months. Payments on amortizing notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount. Further information about amortizing
notes including an amortization schedule will be included in the pricing
supplement.
Original Issue Discount Notes
We may issue Original Issue Discount Notes. Original Issue Discount Notes
are notes issued at a discount from the principal amount payable at Maturity.
Certain additional considerations relating to Original Issue Discount Notes may
be described in the pricing supplement.
Other Provisions, Addenda
We may modify any provision of a note by using the section marked "Other
Provisions" or by providing an addendum to the note.
Euro Redenomination
If notes are denominated in a foreign currency which may be replaced by
euro, we may include provisions in the pricing supplement allowing for the
redenomination of the notes from the original currency to euro.
S-19
UNITED STATES TAX CONSIDERATIONS
The following discussion summarizes certain U.S. federal income tax
considerations that may be relevant to you if you invest in notes. Except as
discussed under "Non-U.S. Holders" and "Information Reporting and Backup
Withholding", the discussion generally applies only to holders of notes that
are U.S. holders. You will be a U.S. holder if you are an individual who is a
citizen or resident of the United States, a U.S. domestic corporation, or any
other person that is subject to U.S. federal income tax on a net income basis
in respect of an investment in the notes. This summary deals only with U.S.
holders that hold notes as capital assets. It does not address considerations
that may be relevant to you if you are an investor that is subject to special
tax rules, such as a bank, thrift, real estate investment trust, regulated
investment company, insurance company, dealer in securities or currencies,
trader in securities or commodities that elects mark to market treatment,
person that will hold notes as a hedge against currency risk or as a position
in a "straddle," conversion or other integrated transaction, tax-exempt
organization, certain former citizens and residents or a person whose
"functional currency" is not the U.S. dollar. Any special U.S. federal income
tax considerations relevant to a particular issue of notes will be discussed in
the applicable pricing supplement.
This summary is based on laws, regulations, rulings and decisions now in
effect, all of which may change. Any change could apply retroactively and could
affect the continued validity of this summary.
You should consult your tax adviser about the tax consequences of purchasing
or holding notes, including the relevance to your particular situation of the
considerations discussed below, as well as the relevance to your particular
situation of state, local or other tax laws.
Payments or Accruals of Interest
Payments or accruals of "qualified stated interest" (as defined below) on a
note will be taxable to you as ordinary interest income at the time that you
receive or accrue such amounts (in accordance with your regular method of tax
accounting). If you use the cash method of tax accounting and you receive
payments of interest pursuant to the terms of a note denominated in a currency
other than U.S. dollars (a "foreign currency"), the amount of interest income
you will realize will be the U.S. dollar value of the foreign currency payment
based on the exchange rate in effect on the date you receive the payment,
regardless of whether you convert the payment into U.S. dollars. If you are an
accrual-basis U.S. holder, the amount of interest income you will realize will
be based on the average exchange rate in effect during the interest accrual
period (or with respect to an interest accrual period that spans two taxable
years, at the average exchange rate for the partial period within the taxable
year). Alternatively, as an accrual-basis U.S. holder, you may elect to
translate all interest income on foreign currency-denominated notes at the spot
rate on the last day of the accrual period (or the last day of the taxable
year, in the case of an accrual period that spans more than one taxable year)
or on the date that you receive the interest payment if that date is within
five business days of the end of the accrual period. If you make this election,
you must apply it consistently to all debt instruments from year to year and
you cannot change the election without the consent of the Internal Revenue
Service. If you use the accrual method of accounting for tax purposes, you will
recognize foreign currency gain or loss on the receipt of a foreign currency
interest payment if the exchange rate in effect on the date the payment is
received differs from the rate applicable to a previous accrual of that
interest income. This foreign currency gain or loss will be treated as ordinary
income or loss, but generally will not be treated as an adjustment to interest
income received on the note.
Purchase, Sale and Retirement of Notes
Initially, your tax basis in a note generally will equal the cost of the
note to you. Your basis will increase by any amounts that you are required to
include in income under the rules governing original issue discount and market
discount, and will decrease by the amount of any amortized premium and any
payments other than qualified stated interest made on the note. (The rules for
determining these amounts are discussed below.) If you purchase a note that is
denominated in a foreign currency, the cost to you (and therefore generally
your initial tax basis) will be the U.S. dollar value of the foreign currency
amount paid on the date of purchase calculated at the exchange rate in effect
on that date. If the foreign currency note is traded on an established
securities market
S-20
and you are a cash-basis taxpayer (or if you are an accrual-basis taxpayer that
makes a special election), you will determine the U.S. dollar value of the cost
of the note by translating the amount of the foreign currency that you paid for
the note at the spot rate of exchange on the settlement date of your purchase.
The amount of any subsequent adjustments to your tax basis in a note in respect
of foreign currency-denominated original issue discount, market discount and
premium will be determined in the manner described below. If you convert U.S.
dollars into a foreign currency and then immediately use that foreign currency
to purchase a note, you generally will not have any taxable gain or loss as a
result of the conversion or purchase.
When you sell or exchange a note, or if a note that you hold is retired, you
generally will recognize gain or loss equal to the difference between the
amount you realize on the transaction (less any accrued qualified stated
interest, which will be subject to tax in the manner described above under
"Payments or Accruals of Interest") and your tax basis in the note. If you sell
or exchange a note for a foreign currency, or receive foreign currency on the
retirement of a note, the amount you will realize for U.S. tax purposes
generally will be the dollar value of the foreign currency that you receive
calculated at the exchange rate in effect on the date the foreign currency note
is disposed of or retired. If you dispose of a foreign currency note that is
traded on an established securities market and you are a cash-basis U.S. holder
(or if you are an accrual-basis holder that makes a special election), you will
determine the U.S. dollar value of the amount realized by translating the
amount at the spot rate of exchange on the settlement date of the sale,
exchange or retirement.
The special election available to you if you are an accrual-basis taxpayer
in respect of the purchase and sale of foreign currency notes traded on an
established securities market, which is discussed in the two preceding
paragraphs, must be applied consistently to all debt instruments from year to
year and cannot be changed without the consent of the Internal Revenue Service.
Except as discussed below with respect to short-term notes, market discount
and foreign currency gain or loss, the gain or loss that you recognize on the
sale, exchange or retirement of a note generally will be capital gain or loss.
The gain or loss on the sale, exchange or retirement of a note will be
long-term capital gain or loss if you have held the note for more than one year
on the date of disposition. Net long-term capital gain recognized by an
individual U.S. holder generally will be subject to tax at a lower rate than
net short-term capital gain or ordinary income. The ability of U.S. holders to
offset capital losses against ordinary income is limited.
Despite the foregoing, gain or loss recognized on the sale, exchange or
retirement of a foreign currency note that is attributable to changes in
exchange rates will be, subject to limitation discussed below, treated as
ordinary income or loss. This foreign currency gain or loss will not be treated
as an adjustment to interest income that you receive on the note. Gain or loss
attributable to changes in exchange rates will equal the difference between (i)
the U.S. dollar value of the foreign currency principal amount of the foreign
currency note, determined on the date the foreign currency note is disposed of,
and (ii) the U.S. dollar value of the foreign currency principal amount of the
foreign currency note, determined on the date you acquired the note. Foreign
currency gain or loss will be recognized only to the extent of the total gain
or loss recognized on the disposition of a note; accordingly, if you recognize
gain on the disposition of a note that is less than the gain attributable to
change in exchange rates, all the gain recognized will be treated as ordinary
income. Similarly, if you recognize gain on the disposition of a note, but
changes in exchange rates produce a loss, all of the gain you recognize will be
treated as capital gain.
Original Issue Discount
If we issue notes at a discount from their stated redemption price at
maturity, and the discount is equal to or more than the product of one-fourth
of one percent (0.25%) of the stated redemption price at maturity of the notes
multiplied by the number of full years to their maturity, the notes will be
"OID Notes." The difference between the issue price and the stated redemption
price at maturity of the notes will be the "original issue discount." The
"issue price" of the notes will be the first price at which a substantial
amount of the notes are sold to the public for money (i.e., excluding sales of
notes to underwriters, placement agents, wholesalers, or similar persons). The
"stated redemption price at maturity" will include all payments under the notes
other than
S-21
payments of qualified stated interest. The term "qualified stated interest"
generally means stated interest that is unconditionally payable in cash or
property (other than debt instruments issued by us) at least annually during
the entire term of a note at a single fixed interest rate or, subject to
certain conditions, based on one or more interest indices.
If you invest in an OID Note, you generally will be subject to the special
tax accounting rules for original issue discount obligations provided by the
Internal Revenue Code and certain U.S. Treasury regulations. You should be
aware that, as described in greater detail below, if you invest in an OID Note,
you generally will be required to include original issue discount in ordinary
gross income for U.S. federal income tax purposes as it accrues, although you
may not yet have received the cash attributable to that income.
In general, and regardless of whether you use the cash or the accrual method
of tax accounting, if you are the holder of an OID Note with a maturity greater
than one year, you will be required to include in ordinary gross income the sum
of the "daily portions" of original issue discount on that note for all days
during the taxable year that you own the note. The daily portions of original
issue discount on an OID Note are determined by allocating to each day in any
accrual period a ratable portion of the original issue discount allocable to
that period. Accrual periods may be any length and may vary in length over the
term of an OID Note, so long as no accrual period is longer than one year and
each scheduled payment of principal or interest occurs on the first or last day
of an accrual period. The amount of original issue discount on an OID Note
allocable to each accrual period is determined by:
(i) multiplying the "adjusted issue price" (as defined below) of the note at
the beginning of the accrual period by a fraction, the numerator of
which is the annual yield to maturity (defined below) of the note and
the denominator of which is the number of accrual periods in a year; and
(ii) subtracting from that product the amount (if any) payable as qualified
stated interest allocable to that accrual period.
In the case of an OID Note that is a floating rate note, both the "annual
yield to maturity" and the qualified stated interest will be determined for
these purposes as though the note will bear interest in all periods at a fixed
rate generally equal to the rate that would be applicable to interest payments
on the note on its date of issue or, in the case of some floating rate notes,
the rate that reflects the yield that is reasonably expected for the note.
(Additional rules may apply if interest on a floating rate note is based on
more than one interest index.) The "adjusted issue price" of an OID Note at the
beginning of any accrual period will generally be the sum of its issue price
(including any accrued interest) and the amount of original issue discount
allocable to all prior accrual periods, reduced by the amount of all payments
other than any qualified stated interest payments on the note in all prior
accrual periods. All payments on an OID Note (other than qualified stated
interest) will generally be viewed first as payments of previously accrued
original issue discount (to the extent of the previously accrued discount),
with payments considered made from the earliest accrual periods first, and then
as a payment of principal. The "annual yield to maturity" of a note is the
discount rate (appropriately adjusted to reflect the length of accrual periods)
that causes the present value on the issue date of all payments on the note to
equal the issue price. As a result of this "constant yield" method of including
original issue discount income, the amounts you will be required to include in
your gross income if you invest in an OID Note denominated in U.S. dollars
generally will be lesser in the early years and greater in the later years than
amounts that would be includible on a straight-line basis.
You generally may make an irrevocable election to include in income your
entire return on a note (i.e., the excess of all remaining payments to be
received on the note, including payments of qualified stated interest, over the
amount you paid for the note) under the constant yield method described above.
If you purchase notes at a premium or market discount and if you make this
election, you will also be deemed to have made the election (discussed below
under the "Premium" and "Market Discount") to amortize premium or to accrue
market discount currently on a constant yield basis in respect of all other
premium or market discount bonds that you hold.
S-22
In the case of an OID Note that is also a foreign currency note, you should
determine the U.S. dollar amount includible as original issue discount for each
accrual period by (i) calculating the amount of original issue discount
allocable to each accrual period in the foreign currency using the constant
yield method described above and (ii) translating that foreign currency amount
at the average exchange rate in effect during that accrual period (or, with
respect to an interest accrual period that spans two taxable years, at the
average exchange rate for each partial period). Alternatively, you may
translate the foreign currency amount at the spot rate of exchange on the last
day of the accrual period (or the last day of the taxable year, for an accrual
period that spans two taxable years) or at the spot rate of exchange on the
date of receipt, if that date is within five business days of the last day of
the accrual period, provided that you have made the election described above
under "Payments or Accruals of Interest." Because exchange rates may fluctuate,
if you are the holder of an OID Note that is also a foreign currency note, you
may recognize a different amount of original issue discount income in each
accrual period than would be the case if you were the holder of an otherwise
similar OID Note denominated in U.S. dollars. Upon the receipt of an amount
attributable to original issue discount (whether in connection with a payment
of an amount that is not qualified stated interest or the sale or retirement of
the OID Note), you will recognize ordinary income or loss measured by the
difference between the amount received (translated into U.S. dollars at the
exchange rate in effect on the date of receipt or on the date of disposition of
the OID Note, as the case may be) and the amount accrued (using the exchange
rate applicable to such previous accrual).
If you purchase an OID Note outside of the initial offering at a cost less
than its remaining redemption amount (i.e., the total of all future payments to
be made on the note other than payments of qualified stated interest), or if
you purchase an OID Note in the initial offering at a price other than the
note's issue price, you generally will also be required to include in gross
income the daily portions of original issue discount, calculated as described
above. However, if you acquire an OID Note at a price greater than its adjusted
issue price (but less than or equal to its remaining redemption amount), you
will be entitled to reduce your periodic inclusions of original issue discount
to reflect the premium paid over the adjusted issue price.
Floating rate notes generally will be treated as "variable rate debt
instruments" under the OID Regulations. Accordingly, the stated interest on a
Floating Rate Note generally will be treated as "qualified stated interest" and
such a note will not have original issue discount solely as a result of the
fact that it provides for interest at a variable rate. If a floating rate note
does not qualify as a "variable rate debt instrument," the note will be subject
to special rules that govern the tax treatment of debt obligations that provide
for contingent payments. We will provide a description of the tax
considerations relevant to U.S. holders of any such notes in the pricing
supplement.
Certain OID Notes may be redeemed prior to Maturity, either at the option of
the Company or at the option of the holder, or may have special repayment or
interest rate reset features as indicated in the pricing supplement. OID Notes
containing these features may be subject to rules that differ from the general
rules discussed above. If you are considering the purchase of OID Notes with
these features, you should carefully examine the pricing supplement and consult
your tax adviser about their treatment since the tax consequences of original
issue discount will depend, in part, on the particular terms and features of
the notes.
Short-Term Notes
The rules described above will also generally apply to OID Notes with
maturities of one year or less ("short-term notes"), but with some
modifications.
First, the original issue discount rules treat none of the interest on a
short-term note as qualified stated interest, but treat a short-term note as
having original issue discount. Thus, all short-term notes will be OID Notes.
Except as noted below, if you are a cash-basis holder of a short-term note you
will generally not be required to accrue original issue discount currently, but
you will be required to treat any gain realized on a sale, exchange or
retirement of the note as ordinary income to the extent such gain does not
exceed the original issue discount accrued with respect to the note during the
period you held the note. You may not be allowed to deduct
S-23
all of the interest paid or accrued on any indebtedness incurred or maintained
to purchase or carry a short-term note until the Maturity of the note or its
earlier disposition in a taxable transaction. Notwithstanding the foregoing, if
you are a cash-basis U.S. holder of a short-term note, you may elect to accrue
original issue discount on a current basis (in which case the limitation on the
deductibility of interest described above will not apply). A U.S. holder using
the accrual method of tax accounting and some cash method holders (including
banks, securities dealers, regulated investment companies and certain trust
funds) generally will be required to include original issue discount on a
short-term note in gross income on a current basis. Original issue discount
will be treated as accruing for these purposes on a ratable basis or, at the
election of the holder, on a constant yield basis based on daily compounding.
Second, regardless of whether you are a cash-basis or accrual-basis holder,
if you are the holder of a short-term note you may elect to accrue any
"acquisition discount" with respect to the note on a current basis. Acquisition
discount is the excess of the remaining redemption amount of the note at the
time of acquisition over the purchase price. Acquisition discount will be
treated as accruing ratably or, at the election of the holder, under a constant
yield method based on daily compounding. If you elect to accrue acquisition
discount, the original issue discount rules will not apply.
Finally, the market discount rules described below will not apply to
short-term notes.
Premium
If you purchase a note at a cost greater than the note's remaining
redemption amount, you will be considered to have purchased the note at a
premium, and you may elect to amortize the premium as an offset to interest
income, using a constant yield method, over the remaining term of the note. If
the note is redeemable prior to maturity, the amount of amortizable premium is
determined with reference either to the amount payable on maturity or, if it
results in a smaller premium attributable to the earlier redemption period,
with reference to the amount payable on the earlier redemption date. If you
make the election to amortize the premium, it generally will apply to all debt
instruments that you hold at the time of the election, as well as any debt
instruments that you subsequently acquire. In addition, you may not revoke the
election without the consent of the Internal Revenue Service. If you elect to
amortize the premium, you will be required to reduce your tax basis in the note
by the amount of the premium amortized during your holding period. OID Notes
purchased at a premium will not be subject to the original issue discount rules
described above. In the case of premium on a foreign currency note, you should
calculate the amortization of the premium in the foreign currency. Premium
amortization deductions attributable to a period reduce interest income in
respect of that period, and therefore are translated into U.S. dollars at the
rate that you use for interest payments in respect of that period. Exchange
gain or loss will be realized with respect to amortized premium on a foreign
currency note based on the difference between the exchange rate computed on the
date or dates the premium is amortized against interest payments on the note
and the exchange rate on the date the holder acquired the note. If you do not
elect to amortize premium, the amount of premium will be included in your tax
basis in the note. Therefore, if you do not elect to amortize premium and you
hold the note to Maturity, you generally will be required to treat the premium
as capital loss when the note matures.
Market Discount
If you purchase a note at a price that is lower than the note's remaining
redemption amount (or in the case of an OID Note, the note's adjusted issue
price), by 0.25% or more of the remaining redemption amount (or adjusted issue
price), multiplied by the number of remaining whole years to maturity, the note
will be considered to bear "market discount" in an amount equal to such
difference in your hands. In this case, any gain that you realize on the
disposition of the note generally will be treated as ordinary interest income
to the extent of the market discount that accrued on the note during your
holding period. In addition, you may be required to defer the deduction of all
or a portion of the interest paid on any indebtedness that you incurred or
continued to purchase or carry the note. In general, market discount will be
treated as accruing ratably over the term of the note, or, at your election,
under a constant yield method. You must accrue market discount on a foreign
currency note in the specified currency. The amount that you will be required
to include in income in respect of accrued market discount will be the U.S.
dollar value of the accrued amount, generally calculated at the exchange rate
in effect on the date that you dispose of the note.
You may elect to include market discount in gross income currently as it
accrues (on either a ratable or constant yield basis), in lieu of treating a
portion of any gain realized on a sale of the note as ordinary income. If
S-24
you elect to include market discount on a current basis, the interest deduction
deferral rule described above will not apply. If you do make such an election,
it will apply to all market discount debt instruments that you acquire on or
after the first day of the first taxable year to which the election applies.
The election may not be revoked without the consent of the Internal Revenue
Service. Any accrued market discount on a foreign currency note that is
currently includible in income will be translated into U.S. dollars at the
average exchange rate for the accrual period (or portion thereof within the
holder's taxable year).
Indexed Notes and Other Notes Providing for Contingent Payments
Special rules govern the tax treatment of debt obligations that provide for
contingent payments ("contingent debt obligations"). These rules generally
require accrual of interest income on a constant yield basis in respect of
contingent debt obligations at a yield determined at the time of issuance of
the obligation, and may require adjustments to these accruals when any
contingent payments are made. We will provide a description of the tax
considerations relevant to U.S. holders of any contingent debt obligations in
the pricing supplement.
Non-U.S. Holders
If you are a non-resident alien individual or a foreign corporation (a
"non-U.S. holder"), the interest income that you derive in respect of the notes
generally will be exempt from United States federal withholding tax. This
exemption will apply to you provided that
. you do not actually or constructively own 10 percent or more of the
combined voting power of all classes of our stock and you are not a
controlled foreign corporation that is related, directly or indirectly
to us through stock ownership, and
. the beneficial owner provides a statement (generally, an Internal
Revenue Service Form W-8BEN) signed under penalties of perjury that
includes its name and address and certifies that it is a non-U.S. person
in compliance with applicable requirements (or satisfies certain
documentary evidence requirements for establishing that it is a non-U.S.
person).
If you are a non-U.S. holder, any gain you realize on a sale, exchange or
other disposition of notes generally will be exempt from United States federal
income tax, including withholding tax. This exemption will not apply to you if
your gain is effectively connected with your conduct of a trade or business in
the United States or you are an individual holder and are present in the United
States for 183 days or more in the taxable year of the disposition and either
your gain is attributable to an office or other fixed place of business that
you maintain in the United States or you have a tax home in the United States.
United States Federal estate tax will not apply to a note held by you if at
the time of death you were not a citizen or resident of the United States, you
did not actually or constructively own 10 percent or more of the combined
voting power of all classes of our stock and payments of interest on the note
would not have been effectively connected with the conduct by you of a trade or
business in the United States.
For purposes of applying the rules set forth under this heading "Non-U.S.
Holders" to a note held by an entity that is treated as fiscally transparent
(for example, a partnership) for U.S. federal income tax purposes, the
beneficial owner means each of the ultimate beneficial owners of the entity.
Information Reporting and Backup Withholding
The paying agent must file information returns with the Internal Revenue
Service in connection with payments made on the notes to certain U.S. holders.
If you are a U.S. holder, you generally will not be subject to United States
backup withholding tax on such payments if you provide your taxpayer
identification number to the paying agent. You may also be subject to
information reporting and backup withholding tax requirements with respect to
the proceeds from a sale of the notes. If you are a non-U.S. holder, you may
have to comply with certification procedures to establish your non-U.S. status
in order to avoid information reporting and backup withholding tax
requirements. The certification procedures required to claim the exemption from
withholding tax on interest income described above will satisfy these
requirements. The amount of any backup withholding from a payment to a holder
may be allowed as a credit against the holder's U.S. federal income tax
liability and may entitle the holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
S-25
PLAN OF DISTRIBUTION
General
We are offering the notes on a continuous basis through agents that have
agreed to use their reasonable best efforts to solicit orders. We have the
right to accept orders or reject proposed purchases in whole or in part. The
agents also have the right, using their reasonable discretion, to reject any
proposed purchase of the notes in whole or in part. We expect to pay an agent a
commission ranging from 0.05% to 0.60% of the principal amount of notes they
sell. The exact commission paid will be determined by the stated maturity of
the notes sold. The following table describes the potential proceeds we will
receive but does not include expenses payable by us which we estimate to be
approximately $5,414,500, including SEC filing fees:
================================================================================
Price to Agents' Proceeds to
Public Commissions Us
-------------------------------------------------------------------------------------
Per Note 100% 0.05% - 0.60% 99.40% - 99.95%
-------------------------------------------------------------------------------------
Total... $50,005,600,650 $25,002,800 - $300,033,604 $49,705,567,046 - $49,980,597,850
================================================================================
We may arrange for notes to be sold through any agent or may sell notes
directly to investors. If we sell notes directly to investors, no commission or
discount will be paid. We also may sell notes to any agent as principal for the
agent's account at a price agreed upon at the time of sale. These notes may be
resold by the agent to investors at a fixed public offering price or at
prevailing market prices or at a related price, as determined by the agent.
Unless otherwise specified in the pricing supplement, any note sold to an agent
as principal will be purchased at a price equal to 100% of the principal amount
minus a discount equal to the commission that would be paid on an agency sale
of a note of identical Maturity.
Agents may sell notes purchased from us as principal to other dealers for
resale to investors and other purchasers and may provide any portion of the
discount received in connection with their purchase from us to such dealers.
After the initial public offering of the notes, the public offering price, the
concession and the discount may be changed.
The notes will not have an established trading market when issued. Also, the
notes will not be listed on any securities exchange. The agents may make a
market in the notes, but are not obligated to do so and may discontinue any
market-making at any time without notice. We cannot assure you that a secondary
market for any notes will develop or that any notes will be sold.
In connection with the offering of notes, the agents may engage in certain
transactions that stabilize the price of notes. Such transactions may consist
of bids or purchases for the purpose of pegging, fixing or maintaining the
price of notes. If the agents create a short position in notes, i.e., if they
sell notes in an aggregate principal amount exceeding that set forth in the
applicable pricing supplement, the agents may reduce that short position by
purchasing notes in the open market. In general, purchases of notes for the
purpose of stabilization or to reduce a short position could cause the price of
notes to be higher than it might be in the absence of such purchases.
Neither we nor any of the agents makes any representation or prediction as
to the direction or magnitude of any effect that the transactions described in
the immediately preceding paragraph may have on the price of notes. In
addition, neither we nor any of the agents makes any representation that the
agents will engage in any such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The agents may be deemed to be "underwriters" within the meaning of the
Securities Act. We have agreed to indemnify the agents against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that they may be required to make in connection with such
indemnification.
S-26
We are offering the notes through the following agents: Deutsche Bank
Securities Inc., GECC Capital Markets Group, Inc., Goldman, Sachs & Co., J.P.
Morgan Securities Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc. and UBS Warburg LLC. We may also
sell notes from time to time through one or more additional agents on
substantially the same terms as those applicable to the agents named above.
The agents and dealers and their affiliates may engage in transactions with,
or perform services for, us or our affiliates in the ordinary course of their
businesses. GECC owns all of the common stock of GECC Capital Markets Group,
Inc., one of the agents. Each offering of the notes in which GECC Capital
Markets Group, Inc. participates will be conducted in compliance with the
requirements of Rule 2720 of the NASD regarding an NASD member firm
distributing the securities of an affiliate. The maximum commission or discount
to be received by any NASD member or independent agent will not be greater than
8% of the principal amount of notes they sell.
LEGAL OPINIONS
Alan M. Green, our Associate General Counsel, Treasury Operations, will
issue an opinion about the legality of the notes for us. Davis Polk & Wardwell,
New York, New York will issue an opinion for the agents. Cleary, Gottlieb,
Steen & Hamilton, New York, New York will issue an opinion regarding the
"United States Tax Considerations" section of this prospectus supplement. Mr.
Green beneficially owns or has rights to acquire an aggregate of less than
0.01% of General Electric Company's common stock.
S-27
GLOSSARY
The following is a glossary of terms used in this prospectus supplement.
"Bond Equivalent Yield" means the rate for which is quoted on a bank
discount basis, a yield (expressed as a percentage) calculated in accordance
with the following formula:
D x N
Bond Equivalent Yield = ----------- X 100
360 - D x M
where "D" refers to the per annum rate for the security, quoted on a bank
discount basis and expressed as a decimal; "N" refers to 365 or 366, as the
case may be and "M" refers to the actual number of days in the period for which
interest is being calculated.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New
York; provided, however, that, with respect to notes denominated in a foreign
currency, such day is also not a day on which commercial banks are authorized
or required by law, regulation or executive order to close in the Principal
Financial Center of the country issuing the specified currency (or, if the
specified currency is euro, such day is also a day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open);
provided, further, that, with respect to LIBOR notes (other than those
denominated in euro), such day is also a London Business Day.
"Calculation Date" means the date by which the calculation agent calculates
an interest rate for a floating rate note, which will be in respect of any
Interest Determination Date, the earlier of (i) the tenth day after the
Interest Determination Date or, if such day is not a Business Day, the next
Business Day, or (ii) the Business Day immediately before the applicable
interest payment date or Maturity, as the case may be (except in the case of a
LIBOR note where the Calculation Date is the Interest Determination Date).
"Designated CMT Telerate Page" means the display on Telerate (or any
successor service) on the page designated in the applicable pricing supplement
(or any other page as may replace such page on such service. If no such page is
specified in the applicable pricing supplement, the Designated CMT Telerate
Page shall be 7052, for the most recent week.
"Designated LIBOR Currency" means the currency (including composite
currencies and euro) specified in the pricing supplement as to which LIBOR
shall be calculated. If no such currency is specified in the pricing
supplement, the Designated LIBOR Currency will be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in
the applicable pricing supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Designated LIBOR Currency, or (b) if "LIBOR Telerate"
is specified in the applicable pricing supplement or neither "LIBOR Reuters"
nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the
display on Telerate (or any successor service) for the purpose of displaying
the London interbank rates of major banks for the applicable Designated LIBOR
Currency.
"DTC" means The Depository Trust Company.
"euro" means the lawful currency of the member states of the European Union
that adopt the single currency in accordance with the Treaty establishing the
European Communities, as amended.
"FHLB Index" means the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District most recently
announced by the Federal Home Loan Bank.
S-28
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
"Indenture" means the Third Amended and Restated Indenture dated as of
February 27, 1997 between us and JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank), as successor trustee, as supplemented by the First
Supplemental Indenture dated as of May 3, 1999 and the Second Supplemental
Indenture dated as of July 2, 2001.
"Index Maturity" for any note is the period of maturity of the instrument,
obligation or index from which the interest rate is calculated.
"Interest Determination Date" with respect to the CD Rate and the CMT Rate
will be the second Business Day immediately preceding the applicable Interest
Reset Date; the "Interest Determination Date" with respect to the Commercial
Paper Rate, the Federal Funds Rate and the Prime Rate will be the Business Day
immediately preceding the applicable Interest Reset Date; the "Interest
Determination Date" with respect to the Eleventh District Cost of Funds Rate
will be the last working day of the month immediately preceding the applicable
Interest Reset Date on which the Federal Home Loan Bank of San Francisco
publishes the FHLB Index; and the "Interest Determination Date" with respect to
LIBOR will be the second London Business Day immediately preceding the
applicable Interest Reset Date, unless the Index Currency is (i) pounds
sterling, in which case the "Interest Determination Date" will be the
applicable Interest Reset Date or (ii) euro, in which case the Interest
Determination Date will be the second TARGET Settlement Date preceding such
Interest Reset Date. With respect to the Treasury Rate, the "Interest
Determination Date" will be the day in the week in which the applicable
Interest Reset Date falls on which day Treasury bills are normally auctioned
(Treasury bills are normally sold at an auction held on Monday of each week,
unless such Monday is a legal holiday, in which case the auction is normally
held on the immediately succeeding Tuesday although such auction may be held on
the preceding Friday); provided, however, that if an auction is held on Friday
of the week preceding the applicable Interest Reset Date, the "Interest
Determination Date" will be such preceding Friday. The "Interest Determination
Date" pertaining to a floating rate note the interest rate of which is
determined by reference to two or more Interest rate bases will be the most
recent Business Day which is at least two Business Days prior to the applicable
Interest Reset Date for such floating rate note on which each Interest rate
basis is determinable. Each Interest rate basis will be determined as of such
date, and the applicable interest rate will take effect on the applicable
Interest Reset Date.
"JPMorgan Chase" means JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank) which is our indenture trustee and paying agent and registrar
for the notes.
"London Business Day" means a day on which commercial banks are open for
business (including dealings in the Designated LIBOR Currency) in London.
"Maturity" means the date on which the principal of a note or an installment
of principal becomes due and payable as provided in the note or in the
Indenture, whether at stated maturity or by declaration of acceleration, call
for redemption or otherwise.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the period for which accrued interest is being
calculated.
D x 360 x 100
Money Market Yield = -------------
360 - (D x M)
"Noon Buying Rate" means the noon U.S. dollar buying rate in The City of New
York for cable transfers of the specified foreign currency as certified by the
Federal Reserve Bank of New York.
S-29
"OID Regulations" means regulations issued by the IRS concerning the
treatment of debt instruments issued with original issue discount.
"Original Issue Discount Note" means any note that provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to the Indenture.
"Principal Financial Center" means (i) the capital city of the country
issuing the currency in which the notes are denominated or (ii) the capital
city of the country to which the Designated LIBOR Currency relates, as
applicable, except, in the case of (i) or (ii) above, that with respect to the
following currencies, the "Principal Financial Center" will be as indicated
below:
Currency Principal Financial Center
-------- --------------------------
United States dollars............. The City of New York
Australian dollars................ Sydney
Canadian dollars.................. Toronto
South African rand................ Johannesburg
Swiss francs...................... Zurich
"Reuters Screen PRIME 1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "US PRIME 1" page (or such
other page as may replace the US PRIME 1 page on such service) for the purpose
of displaying prime rates or base lending rates of major United States banks.
"Spread" means the number of basis points (one basis point equals
one-hundredth of a percentage point) to be added to or subtracted from the
interest rate of a floating rate note.
"Spread Multiplier" means the percentage of the interest rate that may be
specified in the applicable pricing supplement by which the interest rate or a
floating rate note will be multiplied.
"TARGET Settlement Date" means any day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open.
"Telerate" means Moneyline Telerate, Inc. (or any successor service).
"Telerate Page 120" means page 120 of Telerate, or any other page as may
replace such page on such service.
S-30
PROSPECTUS
General Electric Capital Corporation
Debt Securities
Warrants to Purchase Debt Securities
Preferred Stock
Guarantees, Letters of Credit and Promissory Notes or Loan
Obligations, Including Interests Therein
General Electric Capital Corporation may offer from time to time:
. senior, unsecured debt securities,
. warrants to purchase any of the debt securities,
. variable cumulative preferred stock, par value $100 per share, which may
be issued in the form of depositary shares evidenced by depositary
receipts,
. preferred stock, par value $.01 per share, which may be issued in the form
of depositary shares evidenced by depositary receipts and
. senior unsecured guarantees, direct-pay letters of credit and indebtedness
evidenced by promissory notes or loan obligations, including in each case
interests therein.
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
-----------------
These securities have not been approved by the SEC or any State securities
commission, nor have these organizations determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
-----------------
April 9, 2002
You should rely only on the information incorporated by reference or
provided in this prospectus and the prospectus supplement. We have authorized
no one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
References in this prospectus to "GECC", "we", "us" and "our" are to General
Electric Capital Corporation.
-----------------
WHERE YOU CAN GET MORE
INFORMATION ON GECC
GECC files annual, quarterly and current reports with the SEC. You may
obtain any document we file with the SEC at the SEC's Public Reference Rooms in
Washington, D.C., Chicago, Illinois and New York, New York. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Our SEC filings are also accessible through the Internet at the
SEC's Web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until our offering is
completed:
(i)GECC's Annual Report on Form 10-K for the year ended December 31, 2001;
and
(ii)GECC's Current Report on Form 8-K dated as of March 25, 2002.
You may request a copy of these filings at no cost. Requests should be
directed to David P. Russell, Counsel--Treasury Operations and Assistant
Secretary, General Electric Capital Corporation, 260 Long Ridge Road, Stamford,
Connecticut 06927, Telephone No. (203) 357-4000.
2
THE COMPANY
General Electric Capital Corporation was incorporated in 1943 in the State
of New York, under the provisions of the New York Banking Law relating to
investment companies, as successor to General Electric Contracts Corporation,
which was formed in 1932. Until November 1987, our name was General Electric
Credit Corporation. As of July 2001, General Electric Capital Corporation
completed its reincorporation as a Delaware corporation. All of our outstanding
common stock is owned by General Electric Capital Services, Inc. ("GE Capital
Services") formerly General Electric Financial Services, Inc., the common stock
of which is in turn wholly owned directly or indirectly by General Electric
Company ("GE Company"). Our business originally related principally to
financing the distribution and sale of consumer and other products of GE
Company. Currently, however, the types and brands of products we finance and
the services we offer are significantly more diversified. Very few of the
products we finance are manufactured by GE Company.
We operate in five operating segments: consumer services, equipment
management, mid-market financing, specialized financing and specialty
insurance. Our operations are subject to a variety of regulations in their
respective jurisdictions.
We offer our services primarily throughout the United States, Canada, Europe
and the Pacific Basin. GECC's principal executive offices are located at 260
Long Ridge Road, Stamford, Connecticut 06927 (telephone number (203) 357-4000).
At December 31, 2001, GECC employed approximately 88,000 persons.
Consolidated Ratio of Earnings to Fixed Charges
Year Ended December 31,
------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
1.48 1.50 1.60 1.52 1.72
Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
Year Ended December 31,
------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
1.46 1.48 1.58 1.50 1.70
For purposes of computing the consolidated ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock dividends,
earnings consist of net earnings adjusted for the provision for income taxes,
minority interest, interest capitalized (net of amortization) and fixed
charges. Fixed charges consist of interest on all indebtedness and one-third of
rentals, which we believe is a reasonable approximation of the interest factor
of such rentals.
USE OF PROCEEDS
Unless otherwise specified in the prospectus supplement accompanying this
prospectus, we will add the net proceeds from the sale of the securities to
which this prospectus and the prospectus supplement relate to our general funds
which we will use for financing our operations. We can conduct additional
financings at any time.
3
PLAN OF DISTRIBUTION
We may sell our securities through agents, underwriters, dealers or directly
to purchasers.
We may designate agents to solicit offers to purchase our securities.
. We will name any agent involved in offering or selling our securities, and
any commissions that we will pay to the agent, in our prospectus
supplement.
. Unless we indicate otherwise in our prospectus supplement, our agents will
act on a best efforts basis for the period of their appointment.
. Our agents may be deemed to be underwriters under the Securities Act of
1933 of any of our securities that they offer or sell.
We may use an underwriter or underwriters in the offer or sale of our
securities.
. If we use an underwriter or underwriters, we will execute an underwriting
agreement with the underwriter or underwriters at the time that we reach
an agreement for the sale of our securities.
. We will include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers will
receive, in our prospectus supplement.
. The underwriters will use our prospectus supplement to sell our securities.
We may use a dealer to sell our securities.
. If we use a dealer, we, as principal, will sell our securities to the
dealer.
. The dealer will then sell our securities to the public at varying prices
that the dealer will determine at the time it sells our securities.
. We will include the name of the dealer and the terms of our transactions
with the dealer in our prospectus supplement.
We may solicit directly offers to purchase our securities, and we may
directly sell our securities to institutional or other investors. We will
describe the terms of our direct sales in our prospectus supplement.
We may indemnify agents, underwriters, and dealers against certain
liabilities, including liabilities under the Securities Act of 1933. Our
agents, underwriters, and dealers, or their affiliates, may be customers of,
engage in transactions with or perform services for us, in the ordinary course
of business.
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering price under
delayed delivery contracts.
. If we used delayed delivery contracts, we will disclose that we are using
them in the prospectus supplement and will tell you when we will demand
payment and delivery of the securities under the delayed delivery
contracts.
. These delayed delivery contracts will be subject only to the conditions
that we set forth in the prospectus supplement.
. We will indicate in our prospectus supplement, the commission that
underwriters and agents soliciting purchases of our securities under
delayed contracts will be entitled to receive.
Unless otherwise provided in the prospectus supplement accompanying this
prospectus, neither the support obligations nor the interests therein will be
offered or sold separately from the underlying securities to which they relate.
The underlying securities will be offered and sold under a separate offering
document.
4
GECC Capital Markets Group, Inc. is one of GECC's subsidiaries and may
participate in offerings of our securities. As a result, we will conduct any
offering of securities in which GECC Capital Markets Group, Inc. participates
in compliance with the applicable provisions of Rule 2720 of the Conduct Rules
of the National Association of Securities Dealers, Inc. Under this rule, no
underwriter or dealer may confirm sales of securities to accounts over which
they exercise discretionary authority. The maximum commission or discount to be
received by any NASD member or independent broker-dealer will not be greater
than 7% of the offering price of the securities they sell.
SECURITIES OFFERED
Using this prospectus, we may offer debt securities, variable cumulative
preferred stock, preferred stock, and warrants to purchase debt securities. In
addition, we may issue guarantees, direct-pay letters of credit and
indebtedness evidenced by promissory notes or loan obligations, including
interests therein. We registered these securities with the SEC using a "shelf"
registration statement. This "shelf" registration statement allows us to offer
any combination of these securities. Each time we offer securities, we must
provide a prospectus supplement that describes the specific terms of the
securities. The prospectus supplement may also provide new information or
update the information in the prospectus.
DESCRIPTION OF DEBT SECURITIES
General
The description below of the general terms of the debt securities will be
supplemented by the more specific terms in the prospectus supplement.
We will issue the debt securities under one or more separate indentures
between us and JPMorgan Chase Bank (formerly known as The Chase Manhattan
Bank), as trustee, or any other trustee as may be designated under the
indentures ( the "Trustee"). None of the indentures limits the amount of debt
securities or other unsecured, senior debt which we may issue.
In addition to the following description of the debt securities, you should
refer to the detailed provisions of each indenture, copies of which are filed
as exhibits to the registration statement.
The prospectus supplement will specify the following terms of such issue of
debt securities:
. the designation, the aggregate principal amount and the authorized
denominations if other than $1,000 and integral multiples of $1,000;
. the percentage of their principal amount at which the debt securities will
be issued;
. the date or dates on which the debt securities will mature;
. the currency, currencies or currency units in which we will make payments
on the debt securities;
. the rate or rates at which the debt securities will bear interest, if any,
or the method of determination of such rate or rates;
. the date or dates from which such interest, if any, shall accrue, the
dates on which such interest, if any, will be payable and the method of
determining holders to whom interest shall be payable;
. the prices, if any, at which, and the dates at or after which, we may or
must repay, repurchase or redeem the debt securities;
. the exchanges, if any, on which the debt securities may be listed;
5
. the trustee under the indenture pursuant to which the debt securities are
to be issued. (Sections 2.02 and 2.02A. Section references refer to the
sections in the applicable indenture.); and
. any other terms of the debt securities not inconsistent with the
provisions of the applicable indenture.
Unless otherwise specified in the prospectus supplement, we will compute
interest payments on the basis of a 360-day year consisting of twelve 30-day
months. (Section 2.10).
The debt securities will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of GECC.
Some of the debt securities may be issued as discounted debt securities to
be sold at a substantial discount below their stated principal amount. The
prospectus supplement will contain any Federal income tax consequences and
other special considerations applicable to discounted debt securities.
The indentures do not contain any provisions that limit:
. our ability to incur indebtedness, or
. provide protection in the event GE Company, as sole indirect stockholder
of GECC, causes GECC to engage in a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
Payment and Transfer
We will issue debt securities only as registered securities, which means
that the name of the holder will be entered in a register which will be kept by
the Trustee or another agent of GECC. Unless we state otherwise in a prospectus
supplement, we will make principal and interest payments at the office of the
paying agent or agents we name in the prospectus supplement or by mailing a
check to you at the address we have for you in the register.
Unless we describe other procedures in a prospectus supplement, you will be
able to transfer registered debt securities at the office of the transfer agent
or agents we name in the prospectus supplement. You may also exchange
registered debt securities at the office of the transfer agent for an equal
aggregate principal amount of registered debt securities of the same series
having the same maturity date, interest rate and other terms as long as the
debt securities are issued in authorized denominations.
Neither GECC nor the Trustee will impose any service charge for any transfer
or exchange of a debt security, however, we may ask you to pay any taxes or
other governmental charges in connection with a transfer or exchange of debt
securities.
Global Notes, Delivery and Form
We may issue some or all of the debt securities in the form of one or more
Global Notes. We will deposit each Global Note with a depositary (a
"Depositary") or with a nominee for a Depositary identified in the applicable
prospectus supplement. We will register each Global Note in the name of such
Depositary or nominee. Unless and until it is exchanged in whole or in part for
debt securities in definitive registered form, a Global Note may not be
transferred, except as a whole by the Depositary for such Global Note to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
For purposes of this Prospectus, "Global Note" refers to the Global Note or
Global Notes representing an entire issue of debt securities.
The specific terms of the depositary arrangement with respect to any debt
securities to be represented by a Global Note will be described in the
prospectus supplement.
6
Modification of the Indentures
In general, our rights and obligations and the rights of the holders under
the indentures may be modified if the holders of not less than 66 2/3% in
aggregate principal amount of the outstanding debt securities of each series
affected by the modification consent to it. However, Section 10.02 of each
indenture provides that, unless each affected holder agrees, we cannot
. make any adverse change to any payment term of a debt security such as
. extending the maturity date
. extending the date on which we have to pay interest or make a sinking
fund payment
. reducing the interest rate
. reducing the amount of principal we have to repay
. changing the currency in which we have to make any payment of principal
premium or interest
. modifying any redemption or repurchase right to the detriment of the
holder
. impairing any right of a holder to bring suit for payment
. reduce the percentage of the aggregate principal amount of debt
securities needed to make any amendment to the indenture or to waive any
covenant or default
. waive any past payment default
. make any change to Section 10.02.
However, if we and the Trustee agree, we can amend the indentures without
notifying any holders or seeking their consent if the amendment does not
materially and adversely affect any holder.
Events of Default
Each indenture defines an Event of Default with respect to any series of
debt securities as any of the following:
. default in any payment of principal or premium, if any, on any debt
security of such series;
. default for 30 days in payment of any interest, if any, on any debt
security of such series;
. default in the making or satisfaction of any sinking fund payment or
analogous obligation on the debt securities of such series;
. default for 60 days after written notice to GECC in performance of any
other covenant in respect of the debt securities of such series contained
in such indenture;
. a default, as defined, with respect to any other series of debt securities
outstanding under the relevant Indenture or as defined in any other
indenture or instrument evidencing or under which GECC has outstanding any
indebtedness for borrowed money, as a result of which such other series or
such other indebtedness of GECC shall have been accelerated and such
acceleration shall not have been annulled within 10 days after written
notice thereof (provided, that the resulting Event of Default with respect
to such series of debt securities may be remedied, cured or waived by the
remedying, curing or waiving of such other default under such other series
or such other indebtedness); or
. certain events involving bankruptcy, insolvency or reorganization.
(Section 6.01).
Each indenture requires us to deliver to the Trustee annually a written
statement as to the presence or absence of certain defaults under the terms
thereof. (Section 4.06). An Event of Default under one series of debt
securities does not necessarily constitute an Event of Default under any other
series of debt securities. Each Indenture provides that the Trustee may
withhold notice to the holders of any series of debt securities issued
7
thereunder of any default if the Trustee considers it in the interest of such
Noteholders to do so provided the Trustee may not withhold notice of default in
the payment of principal, premium, if any, or interest, if any, on any of the
debt securities of such series or in the making of any sinking fund installment
or analogous obligation with respect to such series. (Section 6.08).
Each indenture provides that if an Event of Default occurs and is continuing
with respect to any series of debt securities, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the outstanding
debt securities of such series may declare the principal, or in the case of
discounted debt securities, a portion of the principal amount, of all such debt
securities to be due and payable immediately. Under certain conditions such
declaration may be annulled by the holders of a majority in principal amount of
such debt securities then outstanding. The holders of a majority in principal
amount of such debt securities then outstanding may also waive on behalf of all
holders past defaults with respect to a particular series of debt securities
except, unless previously cured, a default in payment of principal, premium, if
any, or interest, if any, on any of the debt securities of such series, or the
payment of any sinking fund instalment or analogous obligation on the debt
securities of such series (Sections 6.01 and 6.07).
Other than the duties of a trustee during a default, the Trustee is not
obligated to exercise any of its rights or powers under the indenture at the
request, order or direction of any holders of debt securities of any series
issued thereunder unless such holders shall have offered to the Trustee
reasonable indemnity. (Sections 7.01 and 7.02). Subject to such indemnification
provision, each indenture provides that the holders of a majority in principal
amount of the debt securities of any series issued thereunder at the time
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee thereunder,
or exercising any trust or power conferred on such Trustee with respect to the
debt securities of such series. However, the Trustee may decline to act if it
has not been offered reasonable indemnity or if it determines that the
proceedings so directed would be illegal or involve it in any personal
liability. (Section 6.07).
Concerning the Trustee
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as
successor to The Bank of New York, acts as Trustee under (i) an Amended and
Restated Indenture with us dated as of February 27, 1997, as supplemented by a
Supplemental Indenture with us dated as of May 3, 1999 and a Second
Supplemental Indenture with us dated as of July 2, 2001, (ii) an Amended and
Restated Indenture with us dated as of February 28, 1997, as supplemented by a
First Supplemental Indenture with us dated as of July 2, 2001, (iii) an
indenture with us dated as of June 3, 1994, as amended and supplemented, and
(iv) an indenture with us dated as of October 1, 1991, as amended and
supplemented. JPMorgan Chase Bank also acts as Trustee under certain other
indentures with us. A number of our series of senior, unsecured notes are
presently outstanding under each of such indentures. Debt securities may be
issued under either of the indentures referred to in clauses (i) and (ii) above.
GECC, GE Company and other affiliates of GE Company maintain various
commercial and investment banking relationships with JPMorgan Chase Bank and
its affiliates in their ordinary course of business.
8
DESCRIPTION OF WARRANTS
General
We may issue warrants to purchase debt securities either alone or together
with debt securities. In addition to this summary, you should refer to the
detailed provisions of the specific warrant agreement for complete terms of the
warrants and the warrant agreement. Each warrant agreement will be between GECC
and a banking institution organized under the laws of the United States or a
state. A form of warrant agreement was filed as an exhibit to the Registration
Statement.
The warrants will be evidenced by warrant certificates. Unless otherwise
specified in the prospectus supplement, the warrant certificates may be traded
separately from the debt securities, if any, with which the warrant
certificates were issued. Warrant certificates may be exchanged for new warrant
certificates of different denominations at the office of an agent that we will
appoint. Until a warrant is exercised, the holder of a warrant does not have
any of the rights of a debtholder and is not entitled to any payments on, any
debt securities issuable upon exercise of the warrants.
We may issue warrants in one or more series. The prospectus supplement
accompanying this prospectus relating to the particular series of warrants,
will contain terms of the warrants, including:
. the title and the aggregate number of warrants;
. the debt securities for which each warrant is exercisable;
. the date or dates on which such warrants will expire;
. the price or prices at which such warrants are exercisable;
. the currency or currencies in which such warrants are exercisable;
. the periods during which and places at which such warrants are exercisable;
. the terms of any mandatory or optional call provisions;
. the price or prices, if any, at which the warrants may be redeemed at the
option of the holder or will be redeemed upon expiration;
. the identity of the warrant agent; and
. the exchanges, if any, on which such warrants may be listed.
Exercise of Warrants
You may exercise warrants by payment to our warrant agent of the exercise
price, in each case in such currency or currencies as are specified in the
warrant, and giving your identity and the number of warrants to be exercised.
Once you pay our warrant agent and deliver the properly completed and executed
warrant certificate to our warrant agent at the specified office, our warrant
agent will, as soon as practicable, forward notes to you in authorized
denominations. If you exercise less than all of the warrants evidenced by your
warrant certificate, you will be issued a new warrant certificate for the
remaining amount of warrants.
9
DESCRIPTION OF THE PREFERRED STOCK
General
Our Board of Directors has authorized the issuance of preferred stock. The
terms of the preferred stock will be stated and expressed in a resolution or
resolutions to be adopted by our Board of Directors (or any duly authorized
committee of the Board of Directors) consistent with our restated certificate
of incorporation. The preferred stock, when issued and sold, will be fully paid
and non-assessable and will have no pre-emptive rights.
As of the date of this prospectus, our capital stock as authorized by our
sole common stockholder consists of:
. 3,866,000 shares of Common Stock, par value of $.01 per share,
. 33,000 shares of Variable Cumulative Preferred Stock, par value $100 per
share, and
. 750,000 shares of Preferred Stock, par value $.01 per share.
In order to distinguish between our two classes of preferred stock, we will
refer to the first class of our preferred stock as "Variable Cumulative
Preferred Stock" and to the second class as our "second class of preferred
stock". When we refer to both classes we use the phrase "preferred stock".
3,837,825 shares of Common Stock and 26,000 shares of Variable Cumulative
Preferred Stock are presently outstanding. There are no shares of our second
class of preferred stock currently outstanding. Each Series of Variable
Cumulative Preferred Stock ranks equally with each other Series of Variable
Cumulative Preferred Stock as to dividend and liquidation preference.
We will describe the particular terms of any series of preferred stock being
offered by use of this prospectus in the prospectus supplement relating to that
series of preferred stock. Those terms may include:
. the designation, number of shares and stated value per share;
. the amount of liquidation preference;
. the initial public offering price at which shares of such series of
preferred stock will be sold;
. the dividend rate or rates (or method of determining the dividend rate);
. the dates on which dividends shall be payable, the date from which
dividends shall accrue and the record dates for determining the holders
entitled to such dividends;
. any redemption or sinking fund provisions;
. any voting rights;
. any conversion or exchange provisions;
. any provisions to issue the shares of such series as depositary shares
evidenced by depositary receipts; and
. any additional dividend, redemption, liquidation or other preferences or
rights and qualifications, limitations or restrictions thereof.
If the terms of any series of preferred stock being offered differ from the
terms set forth below, we will also disclose those terms in the prospectus
supplement relating to that series of preferred stock. In addition to this
summary, you should refer to our restated certificate of incorporation for the
complete terms of preferred stock being offered.
We will specify the transfer agent, registrar, dividend disbursing agent and
redemption agent for each series of preferred stock in the prospectus
supplement relating to that series.
10
Dividend Rights
If you purchase preferred stock being offered by this prospectus, you will
be entitled to receive, when, and as declared by our board of directors, cash
or other dividends at the rates, or as determined by the method described in,
and on the dates set forth in, the prospectus supplement. Dividend rates may be
fixed or variable or both. Different series of preferred stock may be entitled
to dividends at different dividend rates or based upon different methods of
determination. We will pay each dividend to the holders of record as they
appear on our stock books on record dates determined by the board of directors.
Dividends on any series of the preferred stock may be cumulative or
noncumulative, as specified in the prospectus supplement. If the board of
directors fails to declare a dividend on any series of preferred stock for
which dividends are noncumulative, then your right to receive that dividend
will be lost, and we will have no obligation to pay the dividend for that
dividend period, whether or not we declare dividends for any future dividend
period. Dividends on the shares of preferred stock will accrue from the date on
which we initially issue such series of preferred stock or as otherwise set
forth in the prospectus supplement relating to such series. The prospectus
supplement relating to a series of preferred stock will describe any
adjustments to be made, if any, to the dividend rate in the event of certain
amendments to the Internal Revenue Code of 1986, as amended, with respect to
the dividends-received deduction.
In particular, the dividend payment dates on the Variable Cumulative
Preferred Stock will be the last day of each dividend period, regardless of its
length, and, in the case of dividend periods of more than 99 days, on the
following additional dates:
. if such Dividend Period is from 100 to 190 days, on the 91st day;
. if such Dividend Period is from 191 to 281 days, on the 91st and 182nd
days;
. if such Dividend Period is from 282 to 364 days, on the 91st, 182nd and
273rd days; and
. if such Dividend Period is from two to 30 years, on January 15, April 15,
July 15 and October 15 of each year.
In the event a dividend payment date falls on a day that is not a business
day, then the dividend payment date shall be the business day next succeeding
such date. After the initial dividend period, each subsequent dividend period
will begin on a dividend payment date and will end 49 days later. However, we
may elect subsequent dividend periods that are longer than 49 days. We will
notify you of any such election and follow the procedures that will be set
forth in a prospectus supplement for the series of Variable Cumulative
Preferred Stock. After the initial dividend period, the dividend rates on the
Variable Cumulative Preferred Stock will be determined pursuant to an auction
method, subject to any maximum or minimum interest rate, which will be
described in the prospectus supplement relating to such series of Variable
Cumulative Preferred Stock.
The dividend payment dates and the dividend periods with respect to our
second class of preferred stock will be described in the prospectus supplement
relating to such series of our second class of preferred stock.
We may not declare any dividends on any shares of common stock, or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any shares of common
stock or make any distribution in respect thereof, whether in cash or property
or in obligations or our stock, other than common stock unless
. full cumulative dividends shall have been paid or declared and set apart
for payment on all outstanding shares of preferred stock and other classes
and series of our preferred stock and
. we are not in default or in arrears with respect to any sinking or other
analogous fund or other agreement for the purchase, redemption or other
retirement of any shares of our preferred stock.
In the event we have outstanding shares of more than one series of our
preferred stock ranking equally as to dividends and dividends on one or more of
such series of preferred stock are in arrears, we are required to make dividend
payments ratably on all outstanding shares of such preferred stock in
proportion to the respective
11
amounts of dividends in arrears on all such preferred stock to the date of such
dividend payment. You will not be entitled to any dividend, whether payable in
cash, property or stock, in excess of full cumulative dividends on shares of
the preferred stock you own. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments which may be in
arrears.
Liquidation Rights
In the event of our liquidation, either voluntary or involuntary,
dissolution or winding-up, we will be required to pay the liquidation
preference specified in the prospectus supplement relating to those shares of
preferred stock, plus accrued and unpaid dividends, before we make any payments
to holders of our common stock or any other class of our stock ranking junior
to that preferred stock. If we do not have sufficient assets to pay the
liquidation preference, plus accrued and unpaid dividends, on all classes of
preferred stock that rank equally upon liquidation, we will pay holders of the
preferred stock proportionately based on the full amount to which they are
entitled. Other than their claims to the liquidation preference and accrued and
unpaid dividends, holders of preferred stock will have no claim to any of our
other remaining assets. Neither the sale of all or substantially all our
property or business nor a merger or consolidation by us with any other
corporation will be considered a dissolution, liquidation or winding-up of our
business or affairs, if that transaction does not impair the voting power,
preferences or special rights of the holders of shares of preferred stock.
Voting Rights
Holders of our common stock are entitled to one vote per share on all
matters which arise at any meeting of shareholders. Holders of preferred stock
being offered by this prospectus will not be entitled to vote, except as set
forth below, in a prospectus supplement or as otherwise required by law.
The holders of Variable Cumulative Preferred Stock are not entitled to vote
except as required by law or as set forth in a prospectus supplement. However,
we may not alter any of the preferences, privileges, voting powers or other
restrictions or qualifications of a series of Variable Cumulative Preferred
Stock in a manner substantially prejudicial to the holders thereof without the
consent of the holders of at least 66 2/3% of the total number of shares of
such series.
With respect to our second class of preferred stock, in the event that six
quarterly dividends (whether or not consecutive) payable on any series of our
second class of preferred stock shall be in arrears, the holders of each series
of our second class of preferred stock, voting separately as a class with all
other holders of preferred stock with equal voting rights, shall be entitled at
our next annual meeting of stockholders (and at each subsequent annual meeting
of stockholders), to vote for the election of two of our directors, with the
remaining directors to be elected by the holders of shares of any other class
or classes or series of stock entitled to vote therefor. Until the arrears in
payments of all dividends which permitted the election of such directors shall
cease to exist, any director who has been so elected may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the preferred stock at the time entitled to cast a majority of the votes
entitled to be cast for the election of any such director at a special meeting
of such holders called for that purpose, and any vacancy thereby created may be
filled by the vote of such holders. The holders of shares of our second class
of preferred stock shall no longer be entitled to vote for directors once the
past due dividends have all been paid unless dividends later become in arrears
again. Once the past due dividends have all been paid, then the directors
elected by the preferred stockholders will no longer be directors.
We may not take certain actions without the consent of at least 66 2/3% of
the shares of our second class of preferred stock, voting together as a single
class without regard to series. We need such 66 2/3% consent to:
. create any class or series of stock with preference as to dividends or
distributions of assets over any outstanding series of our second class of
preferred stock (other than a series which has no right to object to such
creation) or
12
. alter or change the provisions of our restated certificate of
incorporation so as to adversely affect the voting power, preferences or
special rights of the holders of shares of our second class of preferred
stock; provided, however, that if such creation or such alteration or
change would adversely affect the voting power, preferences or special
rights of one or more, but not all, series of our second class of
preferred stock at the time outstanding, consent of the holders of shares
entitled to cast at least 2/3rds of the votes entitled to be cast by the
holders of all of the shares of all such series so affected, voting as a
class, shall be required in lieu of the consent of all holders of 2/3rds
of our second class of preferred stock at the time outstanding.
The prospectus supplement relating to a series of preferred stock will
further describe the voting rights, if any, including the number of or
proportional votes per share.
Redemption
The applicable prospectus supplement will indicate whether the series of
preferred stock being offered is subject to redemption, in whole or in part,
whether at our option or mandatorily or otherwise and whether or not pursuant
to a sinking fund. The redemption provisions that may apply to a series of
preferred stock being offered, including the redemption dates and the
redemption prices for that series will be set forth in the prospectus
supplement.
If we fail to pay dividends on any series of preferred stock we may not
redeem that series in part and we may not purchase or otherwise acquire any
shares of such series other than by a purchase or exchange offer made on the
same terms to holders of all outstanding shares of such series.
We may redeem the shares of any series of Variable Cumulative Preferred
Stock out of legally available funds therefore, as a whole or from time to time
in part:
. on the last day of any dividend period at a redemption price of $100,000
per share, plus accumulated and unpaid dividends to the date fixed for
redemption and
. in the case of shares of Variable Cumulative Preferred Stock with a
dividend period equal to or more than two years, on any dividend payment
date for such shares at redemption prices (but not less than $100,000 per
share) determined by us prior to the commencement of such dividend period
plus accumulated and unpaid dividends to the date set forth for redemption.
Conversion Rights
No series of preferred stock will be convertible into our common stock.
DESCRIPTION OF SUPPORT OBLIGATIONS AND INTERESTS THEREIN
General
Support obligations may include guarantees, letters of credit and promissory
notes or loan obligations that are issued in connection with, and as a means of
credit support for, any part of a fixed or contingent payment obligation of
underlying securities issued by third parties. The issuers of the underlying
securities may or may not be affiliated with us. A holder of an underlying
security will also hold uncertificated interests in the related support
obligation, representing the credit enhancement of the holder's underlying
security afforded by the related support obligation.
Support obligations that are issued in the form of promissory notes or loan
obligations, and the related interests, are to be issued under an indenture,
dated as of June 3, 1994, as supplemented, between us and JPMorgan Chase Bank
(formerly known as The Chase Manhattan Bank), as successor trustee. To the
extent that the following disclosure summarizes certain provisions of the
indenture, such summaries do not purport to be complete, and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
indenture, a form of which is filed as an exhibit to the registration statement
of which this prospectus is a part.
13
The terms and conditions of any support obligations and related interests
will be determined by the terms and conditions of the related underlying
securities, and may vary from the general descriptions set forth below. A
complete description of the terms and conditions of any support obligations and
related interests issued pursuant to this prospectus will be set forth in the
accompanying prospectus supplement.
Any support obligations and related interests will be unsecured and will
rank equally and ratably with all of our other unsecured and unsubordinated
indebtedness. The terms of a particular support obligation may provide that a
different support obligation may be substituted therefor, upon terms and
conditions described in the applicable prospectus supplement, provided that
such substitution is carried out in conformity with the Securities Act of 1933
and the rules and regulations thereunder. Unless otherwise specified in the
accompanying prospectus supplement, each support obligation will be governed by
the law of the State of New York. Neither the indenture (with respect to
promissory notes and loan obligations) nor any other document or instrument
(with respect to other forms of support obligations) will limit the amount of
support obligations or interests that may be issued thereunder. Neither the
indenture (with respect to promissory notes and loan obligations) nor any other
document or instrument (with respect to other forms of support obligations)
will contain any provisions that limit our ability to incur indebtedness or
that afford holders of support obligations or interests protection in the event
GE Company, as our ultimate stockholder, causes us to engage in a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction.
Guarantees
Any guarantees that we issue from time to time for the benefit of holders of
specified underlying securities will include the following terms and
conditions, plus any additional terms specified in the accompanying prospectus
supplement.
A guarantee will provide that we unconditionally guarantee the due and
punctual payment of the principal, interest (if any), premium (if any) and all
other amounts due under the applicable underlying securities when the same
shall become due and payable, whether at maturity, pursuant to mandatory or
optional prepayments, by acceleration or otherwise, in each case after any
applicable grace periods or notice requirements, according to the terms of the
applicable underlying securities. Any guarantee shall be unconditional
irrespective of the validity or enforceability of the applicable underlying
security, any change or amendment thereto or any other circumstances that may
otherwise constitute a legal or equitable discharge or defense of a guarantor.
However, we will not waive presentment or demand of payment or notice with
respect to the applicable underlying security unless otherwise provided in the
accompanying prospectus supplement.
We shall be subrogated to all rights of the issuer of the applicable
underlying securities in respect of any amounts paid by us pursuant to the
provisions of a guarantee. The guarantee shall continue to be effective or
reinstated, as the case may be, if at any time any payment made by the issuer
of the applicable underlying security is rescinded or must otherwise be
returned upon the insolvency, bankruptcy or reorganization of GECC, the issuer
of the applicable underlying security or otherwise.
Letters of Credit
Any direct-pay letters of credit we issue from time to time relating to
specified underlying securities shall include the following terms and
conditions, plus any additional terms specified in the accompanying prospectus
supplement.
Any letter of credit will be our direct-pay obligation issued for the
account of the holders of the applicable underlying securities or, in certain
cases, an agent acting on behalf of the issuer of the applicable underlying
securities or a trustee acting on behalf of the holders. The letter of credit
will be issued in an amount that corresponds to principal and, if applicable,
interest and other payments payable with respect to the applicable underlying
securities. Drawings under the letter of credit will reduce the amount
available under the letter of credit, but drawings of a recurring nature (such
as interest) will automatically be reinstated following the date of such
payment provided that the letter of credit has not otherwise expired.
14
The letter of credit will expire at a date and time specified in the
accompanying prospectus supplement, and will also expire upon the earlier
occurrence of certain events, as described in the accompanying prospectus
supplement.
Promissory Notes or Loan Obligations
We may incur indebtedness from time to time to the issuer of underlying
securities, such indebtedness to be evidenced by promissory notes, loan
agreements or other evidences of indebtedness. The purpose of issuing any such
promissory note, loan agreement or other indebtedness will be to enable us,
directly or indirectly, to provide credit support to the applicable underlying
securities by means of our repayment obligation as evidenced by the promissory
note, loan agreement or other indebtedness. The promissory notes, loan
agreements or other indebtedness will provide that only the issuer of the
underlying securities to which such promissory notes, loan agreements or other
indebtedness relate or the issuer's assignee will be entitled to enforce such
promissory notes, loan agreements or other indebtedness against us. Holders of
the relevant underlying securities will not have any third party beneficiary or
other rights under, or be entitled to enforce, the relevant promissory notes,
loan agreements or other indebtedness. The terms and provisions of any such
note, loan agreement or other indebtedness, including principal amount,
provisions or interest and premium, if applicable, maturity, prepayment
provisions, if any, and identity of obligee, will be described in the
applicable prospectus supplement.
Modification of the Indenture
The following provisions will apply to any promissory notes or loan
obligations issued pursuant to the indenture.
In general, our rights and obligations and the rights of the holders under
the indenture may be modified if the holders of not less than 66 2/3% in
aggregate principal amount of the outstanding support obligations of each
series affected by the modification consent to it. However, Section 10.2 of the
indenture provides that, unless each affected holder agrees, we cannot
. change the character of any support obligation from being payable other
than as provided in any related support obligation agreement;
. reduce the principal amount of a support obligation;
. change the currency in which we have to make payment on a support
obligation to a currency other than United States dollars; or
. reduce the percentage of the aggregate principal amount of support
obligations needed to make any amendment to the indenture.
However, if we and the Trustee agree, we can amend the indenture without
notifying any holders or seeking their consent if the amendment does not
materially and adversely affect any holder.
Event of Default
The following provisions will apply to any promissory notes or loan
obligations issued pursuant to the indenture.
Any event of default with respect to any series of support obligations
issued pursuant to the indenture is defined in the indenture as being (a) a
default in any payment of principal or premium, if any, or interest on any
support obligation of such series in accordance with the terms of the related
credit support agreement; or (b) any other event of default as defined in the
related credit support agreement to the extent specifically identified pursuant
to Section 2.2 of the indenture. (Section 6.1). The indenture requires us to
deliver to the Trustee annually a written statement as to the presence or
absence of certain defaults under the terms thereof. (Section 4.4). No event of
default with respect to a particular series of support obligations under the
indenture necessarily constitutes an event of default with respect to any other
series of support obligations issued thereunder or other series of support
obligations not entitled to the benefits of the indenture.
15
The indenture provides that during the continuance of an event of default
with respect to any series of support obligations issued pursuant to the
indenture, either the Trustee or the holders of 25% in aggregate principal
amount of the outstanding support obligations of such series and the interests
of such series (voting together as a single class) may declare the principal of
all such support obligations to be due and payable immediately, but under
certain conditions such declaration may be annulled by the holders of a
majority in principal amount of such support obligations then outstanding. The
indenture provides that past defaults with respect to a particular series of
support obligations issued under the indenture (except, unless theretofore
cured, a default in payment of principal of, or interest on any of the support
obligations of such series) may be waived on behalf of the holders of all
support obligations of such series by the holders of a majority in principal
amount of such support obligations then outstanding. (Sections 6.1 and 6.7).
Subject to the provisions of the indenture relating to the duties of the
Trustee in case an event of default with respect to any series of support
obligations issued pursuant to the indenture shall occur and be continuing, the
Trustee shall be under no obligation to exercise any of its rights or powers
under the indenture at the request, order or direction of any holders of
support obligations of any series issued thereunder unless such holders shall
have offered to the Trustee reasonable indemnity. (Section 6.4). Subject to
such indemnification provision, the indenture provides that the holders of a
majority in principal amount of the support obligations of any series issued
pursuant to the indenture and the interests of such series (voting together as
a single class) thereunder at the time outstanding shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee with respect to the support obligations of such series, provided that
the Trustee may decline to follow any such direction if it has not been offered
reasonable indemnity therefor or if it determines that the proceedings so
directed would be illegal or involve it in any personal liability. (Section
6.7).
Concerning the Trustee
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as
successor to Mercantile-Safe Deposit and Trust Company, acts as Trustee under
an Indenture with us dated as of June 3, 1994, as supplemented by a First
Supplemental Indenture with us dated as of February 1, 1997 and a Second
Supplemental Indenture with us dated as of July 2, 2001. JPMorgan Chase Bank
also acts as Trustee under several other indentures with us, pursuant to which
a number of series of senior, unsecured notes of ours are presently outstanding.
GECC, GE Company and other affiliates of GE Company maintain various
commercial and investment banking relationships with JPMorgan Chase Bank and
its affiliates in their ordinary course of business.
LEGAL OPINIONS
Unless otherwise specified in the prospectus supplement accompanying this
prospectus, Alan M. Green, Associate General Counsel--Treasury Operations and
Assistant Secretary of GECC will provide an opinion for us regarding the
validity of the securities and Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017 will provide an opinion for the underwriters, agents or
dealers. Mr. Green beneficially owns or has rights to acquire an aggregate of
less than 0.01% of GE Company's common stock.
EXPERTS
The audited financial statements incorporated in this prospectus by
reference to GECC's Annual Report on Form 10-K for the year ended December 31,
2001 have been incorporated by reference herein in reliance upon the report of
KPMG LLP, independent certified public accountants, and upon the authority of
said firm as experts in accounting and auditing.
16
================================================================================
You should rely only on the information contained in this document or that
we have referred you to. We have not authorized anyone else to provide you with
information that is different. We are not making an offer of these notes in any
state where the offer is not permitted. The information in this document is
current only as of the date of this document, regardless of the time of
delivery of this document or any sale of the notes.
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Risks of Foreign Currency Notes and Indexed
Notes.................................... S-2
Description of Notes....................... S-4
United States Tax Considerations........... S-20
Plan of Distribution....................... S-26
Legal Opinions............................. S-27
Glossary................................... S-28
Prospectus
Where You Can Get More
Information on GECC...................... 2
The Company................................ 3
Use of Proceeds............................ 3
Plan of Distribution....................... 4
Securities Offered......................... 5
Description of Debt Securities............. 5
Description of Warrants.................... 9
Description of the Preferred Stock......... 10
Description of Support Obligations and
Interests Therein........................ 13
Legal Opinions............................. 16
Experts.................................... 16
================================================================================
================================================================================
US$50,005,600,650
General Electric
Capital Corporation
Global Medium-Term Notes,
Series A, Due From 9 Months to
60 Years From Date of Issue
PROSPECTUS SUPPLEMENT
Deutsche Bank Securities
GECC Capital Markets Group, Inc.
Goldman, Sachs & Co.
JPMorgan
Lehman Brothers
Merrill Lynch & Co.
Salomon Smith Barney
UBS Warburg
April 16, 2002
================================================================================